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EGP / USD CBE market average: CBE website down at dispatch time
EGP / USD at CIB: Buy 15.90 | Sell 16.05
EGP / USD at NBE: Buy 15.90 | Sell 16.05

EGX30 (Thursday): 10,688.16 (+4.52%)
Turnover: EGP 2.174 bn (399% above the 90-day average)
EGX 30 year-to-date: +52.55%

THE MARKET ON THURSDAY: EGX30 ended Thursday’s session on its highest intraday level up 4.52%. None of the EGX30 constituents ended in negative territory. The day’s top gainers were Porto Group, Eastern Co, and TMG Holding. Market turnover was high at EGP 2.2 bn, while local investors were the sole net sellers.

Foreigners: Net long | EGP + 194.5 mn
Regional: Net long | EGP + 23.8 mn
Domestic: Net short | EGP – 218.3 mn

Retail: 69.1% of total trades | 63.6% of buyers | 74.7% of sellers
Institutions: 30.9% of total trades | 36.4% of buyers | 25.3% of sellers

Foreign: 13.4% of total | 17.9% of buyers | 8.9% of sellers
Regional: 12.4% of total | 13.0% of buyers | 11.9% of sellers
Domestic: 74.2% of total | 69.1% of buyers | 79.2% of sellers

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PHAROS VIEW

If Optimism is a Virtue, Reality Check is a Blessing

In a research note out this morning, Pharos Head of Research Radwa El-Swaify writes that after long-awaited reform measures, foreign participation in the market has spiked, affecting trading volumes and share price movements. El-Swaify’s report looks at how “stocks in focus” are positioned within their respective sectors and how far optimism can stretch fair values given the spike witnessed in prices over the last six sessions. To further put things into perspective, the note goes through a reality check of the several opportunities and challenges that corporations in Egypt would have to deal with over the next 6-18 months.

DCF valuations are close to being “stretched” at this point. When we have examined the current assumptions underlying our and consensus DCF valuation and strongly believe that the implied assumptions do capture the turnaround in macroeconomic conditions, which takes us to the next question. Why is the market showing extremely strong momentum that seems to surpass cash flow assumptions? The short answer is Replacement Cost.

Tap here to read the full research report, which includes Pharos’ fundamental strategic view per sector and per key players in each sector. A detailed Egypt valuation table is presented at the end of the report to show valuations and multiples, the stocks Pharos favors and dividend plays.

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WTI: USD 43.41 (-2.80%)
Brent: USD 44.75 (-2.38%)
Natural Gas (Nymex, futures prices) USD 2.63 MMBtu, +0.27%, December 2016 contract)
Gold: USD 1,224.30 / troy ounce (-3.32%)

TASI: 6,528.1 (+2.3%) (YTD: -5.6%)
ADX: 4,282.5 (-0.9%) (YTD: -0.6%)
DFM: 3,274.1 (-0.1%) (YTD: +3.9%)
KSE Weighted Index: 363.1 (+0.9%) (YTD: -4.9%)
QE: 9,961.0 (-0.1%) (YTD: -4.5%)
MSM: 5,417.7 (+0.2%) (YTD: +0.2%)
BB: 1,160.9 (+1.3%) (YTD: -4.5%)