x Abu Dhabi, UAESaturday 20 January 2018

Egypt share price surge triggers halt in trading

Egyptian equities surged yesterday as traders and investors regained confidence in the Egyptian economy.

Eight stocks rose for every one that declined on the Egyptian exchange yesterday as investors returned to the market.
Eight stocks rose for every one that declined on the Egyptian exchange yesterday as investors returned to the market.

Trading was yesterday halted on the Egyptian stock exchange - but this time it was a welcome development for the troubled bourse.

The emergency circuit breaker was triggered yesterday because stocks rose by more than 5 per cent, a reversal of the steep falls that abruptly ended trading several times last week.

The EGX 30 index rose 5.2 per cent to 5,212.08 points, while the broader EGX 100 index jumped 7.1 per cent to 870.95.

Eight stocks rose for every one that declined on the exchange. Banks and telecommunications companies were the most actively traded, led by Commercial International Bank, which rose 7.4 per cent, and Orascom Telecom, which increased 9.5 per cent.

Nassef Sawiris, Egypt's richest man, said broader economic questions left after the turmoil that toppled the presidency of Hosni Mubarak on February 11 were beginning to be answered, encouraging investors to return to the markets.

"I think the biggest challenge is economical," Mr Sawiris said. "That is something Egypt has to tackle - not alone, but with the support of the rest of the world. The other challenges we face existed in the past and will exist in the future. They will take care of themselves."

A "Marshall Plan [recovery programme]" was already in the works and would likely be worth US$10 billion (Dh36.73bn), Mr Sawiris said, adding a deal would be "on the table" by the summer.

Economic support and debt relief was necessary if the country was to stop unemployment from rising and get the economy running at full capacity again, he said.

Mr Sawiris said he believed Egypt would move towards the right on the political spectrum after elections, which would lead to more privatisation and fewer protectionist policies.

Analysts in Egypt said yesterday the stock market was responding to positive remarks from the minister of finance. They said there was also a sense of an end to the initial sell-off of shares following the exchange's reopening last Wednesday after being closed for almost two months.

"People are very excited about the market, buoyed by the rebound on Thursday and high media coverage over the weekend saying that equities did better than expected," said Mohamed Radwan, the head of equities at Pharos Securities in Cairo.

While the broader indexes did well, property stocks hit their price floors within the first hour of trading over concerns about investigations into allegedly corrupt land deals.

Sixth of October Development & Investment Company (Sodic) lost 8 per cent. Egyptian Housing and Development declined 0.6 per cent, while Palm Hills Developments remained unchanged.

Ezz Steel declined 9.9 per cent despite a statement by the company that an investigation and asset-freezing measures related to its majority shareholder and chairman Ahmed Ezz do not relate to the company.

Investment managers said they were seeing more interest from investors to buy Egyptian stocks, especially from the Gulf countries.

"There's still interest on Egypt from investors in the Gulf," said Alfred Fayek, the managing director of Mena equity sales at EFG-Hermes in Cairo.

"Even during the closure, we were approached by investors who wanted to set up accounts and [were] asking for new investors numbers and signing off contracts."

Invest AD, the Abu Dhabi Government-owned investment company, had already begun investing in the market.

"After the market opened we have been buying," said David Sanders, Invest AD's chief investment officer. "We have been anticipating that once the market opens there should be names that will still do well as they have strong fundamentals."

Global Investment House of Kuwait started a two-week campaign yesterday to help the Egyptian economy by waiving brokerage fees for investors in the exchange.

"This is one way of supporting the country's market and Egyptian investors, and we want to induce the economic turnaround," said Fouad Darwish, the senior vice president of the brokerage department at Global Investment. "The market is very vibrant and we still believe in it."