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USD CBE auction (Tuesday, 20 Sep): 8.78 (unchanged since Wednesday, 16 March)
USD parallel market (Saturday, 24 Sep): 12.80-12.82 (from 12.75-12.90 on Wednesday, 21 Sep, Al Mal)

EGX30 (Thursday): 7,913.9 (-0.3 %)
Turnover: EGP 408.2 mn (6% below the 90-day average)
EGX 30 year-to-date: +13.0%

THE MARKET ON THURSDAY: The benchmark EGX30 ended the week in the red, losing 0.3% by the end of the session. Among the day’s worst performers were Qalaa Holdings and Egyptian Resorts, with only a few of the EGX30 constituents ending the day in the green. Telecom Egypt led the best performing stocks of the day on the back of Thursday’s announcement that all three mobile phone operators declined the 4G license terms, which ETEL had acquired earlier this month. Cairo Oils and Soap and Arab Cotton Ginning were also among the day’s top performers. Market turnover was EGP 408.2 mn with foreign investors the sole net sellers of the day.

Foreigners: Net Short | EGP -32.3 mn
Regional: Net Long | EGP +29.6 mn
Domestic: Net Long | EGP +2.7 mn

Retail: 41.0 % of total trades | 38.6 % of buyers | 43.4 % of sellers
Institutions: 59.0 % of total trades | 61.4 % of buyers | 56.6 % of sellers

Foreign: 33.9 % of total | 29.9 % of buyers | 37.9 % of sellers
Regional: 19.4 % of total | 23.1 % of buyers | 15.8 % of sellers
Domestic: 46.7 % of total | 47.0 % of buyers | 46.3 % of sellers

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PHAROS VIEW

MPC maintains rates against expectations citing “transitory” inflation factors

The Central Bank of Egypt’s Monetary Policy Committee elected to keep rates unchanged at its meeting on Thursday, going against the expectations of both consensus and Pharos, with the reason given being the spike in inflation witnessed in August, caused by “transitory cost-push factors,” including higher electricity bills and increased demand on food from Eid El Adha. However, Pharos has continuously noted that raising the interest rate has not been the most effective tool to control inflation, as only 10% of the country is banked and inflation continues to be largely driven by the exchange rate due to the high import bill. Pharos Head of Research Radwa El Swaify examines the MPC’s decision in a research note (downloadable in full here, pdf) released this morning, the highlights of which include:

• We believe that growth and budget deficit concerns have come in play
• As the Fed maintained rates, there was less pressure to raise rates on EGP at this point in time
• Devaluation will still happen; FX availability and magnitude of devaluation are key
• Foreign inflows require confidence in the system and one exchange rate rather than high interest rates
• EGX would probably witness a cautious rebound over held rates and in anticipation of a potential currency movement on Tuesday’s FX auction

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WTI: USD 44.48 (-3.97%)
Brent: USD 45.89 (-3.69%)
Natural Gas (Nymex, futures prices) USD 2.98 MMBtu, (-0.71%, Oct 2016 contract)
Gold: USD 1,341.5 / troy ounce (-0.01%)<br
TASI: Market closed.
ADX: 4,5151.2 (+1.0%) (YTD: +4.8%)
DFM: 3,513.6 (+2.0%) (YTD: +11.5%)
KSE Weighted Index: 351.0 (+0.2%) (YTD: -8.0%)
QE: 10,412.5 (+1.6%) (YTD: -0.2%)
MSM: 5,766.1 (+0.3%) (YTD: +6.7%)
BB: 1,134.5 (flat) (YTD: -6.7%)