Back to the complete issue
Tuesday, 3 March 2020

Egyptian stocks hold steady following Sunday’s rout

Egyptian stocks hold steady following Sunday’s rout: Egyptian equities stabilized yesterday as global markets rebounded from last week’s sell-off on hopes that central banks around the world will launch coordinated stimulus to mitigate against the economic fallout of the covid-19 virus. The EGX30 closed 0.55% in the green, led by a recovery in banking, healthcare and industrial stocks. CIB — which accounts for almost a third of the benchmark index — finished up 0.1%. The EGX30 suffered its worst day’s trading since 2012 on Sunday, falling more than 6% as investors reacted to the intensifying covid-19 crisis.

Trading was heavy with more than EGP 959 mn worth of shares changed hands, or around 63% more than the trailing 90-day average.

Foreign investors slowed the pace yesterday at which they were exiting EGP bonds, a domestic press report suggested. Investors offloaded EGP 4.1 bn worth of bonds on Sunday, but just EGP 297 mn worth yesterday, according to Mahmoud Naghlah, executive manager for fixed income at Al Ahly Financial Investment Management. Keeping this in perspective: That’s a rounding error in the context of the EGP 289 bn worth of total foreign bond holdings as of the end of January, the most recent period for which we have figures.

Amid the global risk-off, investors have been demanding higher yields at recent bond auctions: The CBE sold only half of the EGP 7.5 bn of three-year and seven-year treasury bonds in an auction yesterday amid investor pressure for higher yields. Investors bought just EGP 791 mn of the EGP 3.5 bn seven-year offering after the central bank accepted a yield of 13.979%, almost 300 bps beneath the rate targeted by investors. The EGP 4 bn three-year tranche was more than 2x oversubscribed, but the central bank sold EGP 3.189 bn at a 13.986% yield, more than 200 bps lower than investors’ target rate. This was the third consecutive auction the government has failed to sell its targeted amount after falling short in t-bill auctions on Thursday and Sunday.

EGP WATCH: The EGP eased one piaster against the USD yesterday to 15.59, off from a peak of 15.49 at the beginning of last week.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.