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EGP / USD CBE market average: Buy 17.27 | Sell 17.37
EGP / USD at CIB: Buy 17.26 | Sell 17.36
EGP / USD at NBE: Buy 17.26 | Sell 17.36

EGX30 (Wednesday): 15,107 (+0.1%)
Turnover: EGP 592 mn (33% below the 90-day average)
EGX 30 year-to-date: +15.9%

THE MARKET ON WEDNESDAY: The EGX30 ended Wednesday’s session up 0.1%. CIB, the index heaviest constituent ended up 0.3%. EGX30’s top performing constituents were Pioneers Holding up 3.2%, Telecom Egypt up 1.6%, and Elsewedy Electric up 1.4%. Yesterday’s worst performing stocks were Egypt Kuwait Holding down 2.7%, Heliopolis Housing down 2.0% and Madinet Nasr Housing down 1.1%. The market turnover was EGP 592 mn, and foreign investors were the sole net buyers.

Foreigners: Net Long | EGP +25.3 mn
Regional: Net Short | EGP -0.30 mn
Domestic: Net Short | EGP -25.0 mn

Retail: 53.5% of total trades | 55.4% of buyers | 51.7% of sellers
Institutions: 46.5% of total trades | 44.6% of buyers | 48.3% of sellers

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PHAROS VIEW

Egypt’s reform program is broadly on track: The outlook on Egypt’s macroeconomic climate remains favorable as the reform program is broadly on track, Pharos Holdings says in its latest note on the IMF and program. Egypt’s macroeconomic situation has markedly improved, and has maintained macroeconomic stability thanks to the government’s implementation, with all of June 2018 and December 2018 performance targets having been fully met, with the exception of June’s public debt figures. The outlook on fiscal reforms remains positive as Egypt looks set to follow through on fuel and electricity cuts, while the account deficit continues to fall on the back of a strong resurgence in tourism and contributing to a 0.2% primary budget surplus. Inflation is expected to stabilize to 13-14% by the end of the fiscal year in June. All of this bodes well for Egypt in its fifth IMF review of the reform program in June, which will unlock the final USD 2 bn disbursement of the extended fund facility.

There are risks, however: Government debt remains high and is projected to reach 86% of GDP by the end of FY2018-19. Debt service poses a burden on public finances at the risk of crowding out social spending. The IMF worries that sizeable state debt is being taken on to fund massive infrastructure projects. It also warns against an increase in real interest rates or an abrupt depreciation of the EGP. The IMF recommends maintaining a primary surplus of 2% of GDP, which the FY2018-19 budget is positively positioned to reach. You can catch the full report here (pdf).

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Natural Gas (Nymex, futures prices) USD 2.70 MMBtu, (-0.11%, May 2019 contract)
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