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USD CBE auction (Tuesday, 20 Sep): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Wednesday, 21 Sep): 12.75-12.90 (compared to 12.80 on Tuesday, 20 Sep, Masr Al Arabia, Veto Gate)

EGX30 (Wednesday): 7,937.8 (-1.4%)
Turnover: EGP 515.7 mn (19% above the 90-day average)
EGX 30 year-to-date: +13.3%

THE MARKET ON WEDNESDAY: The EGX30 inched up 0.1% into the first hour of Wednesday’s session, before falling 1.4% by the closing bell. TMG Holding, EFG Hermes and CIB closed down, while the day’s worst performers included Amer Group and Qalaa Holdings. No stocks were in the green by the end of the day, while Porto Group and Egypt Kuwait Holding ended flat. Market turnover was EGP 515.7 mn with foreign investors the sole net buyers of the day.

Foreigners: Net Long | EGP +16.2 mn
Regional: Net Short | EGP -13.2 mn
Domestic: Net Short | EGP -3.0 mn

Retail: 48.9% of total trades | 51.7% of buyers | 46.0% of sellers
Institutions: 51.1% of total trades | 48.3% of buyers | 54.0% of sellers

Foreign: 32.1% of total | 33.6% of buyers | 30.5% of sellers
Regional: 10.5% of total | 9.2% of buyers | 11.8% of sellers
Domestic: 57.4% of total | 57.2% of buyers | 57.7% of sellers

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PHAROS VIEW

It is not about devaluation — it is about availability and rate "expectations"

After reassurances from the government that USD 5-6 bn required to unlock a USD 12 bn IMF funding package, market consensus has shifted that the CBE will devalue the currency before the IMF’s annual fall meetings that should take place 7-9 October in Washington, DC. Pharos Research expects a 100 bps rate hike today and believes that another 100 bps hike in policy rates is much needed for EGP defense, but would probably be implemented at the 17 November meeting of the Central Bank of Egypt’s Monetary Policy Committee to account for the inflation spike induced by VAT and depreciation. Highlights of a note on this topic by Pharos Head of Research Radwa El Swaify (downloadable in full here, pdf) released yesterday include:

• Market expecting USD availability at an official rate of 11.00-11.50; but will it happen?
• Cheer devaluation hype; beware of the meet / fail game of expectations
• Market will definitely cheer devaluation "expectations"; but will be highly volatile to "below expectation" news; needs higher foreign participation to drive another major spike
• Maintain conservative ST trading tactics: Seize the opportunity but watch the downside; security selection is key

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WTI: USD 45.61 (+0.60%)
Brent: USD 47.12 (+0.62%)
Natural Gas (Nymex, futures prices) USD 3.08 MMBtu, (+0.65%, Oct 2016 contract)
Gold: USD 1,337.70 / troy ounce (+0.47%)<br
TASI: 5,750.2 (+0.4%) (YTD: -13.9%)
ADX: 4,470.4 (+0.1%) (YTD: +3.8%)
DFM: 3,446.1 (-0.3%) (YTD: +9.4%)
KSE Weighted Index: 350.5 (0.0%) (YTD: -8.2%)
QE: 10,252.9 (0.0%) (YTD: -1.7%)
MSM: 5,750.2 (0.0%) (YTD: +6.4%)
BB: 1,134.1 (+0.2%) (YTD: -6.7%)