EGX enters bear market as covid-19, oil shock batter stocks
EGX is now in a bear market as covid-19 fears and the oil shock batter stocks: The benchmark EGX30 index fell yesterday to its lowest level since October 2016 as the threat of an oil price war combined with fears about the spread of covid-19 extended the sell-off into a second day.
It was the index’s sharpest one-day drop since 2012 as the EGX30 closed down 7.3% (after having earlier flirted with 8.2%). The index is down 21.3% for the year-to-date.
Real estate, non-banking financial services, and healthcare and pharma were the biggest losers, with Orascom Development Egypt, Qalaa Holdings, and Ibnsina Pharma’s share prices all plummeting 10%. Shipping and transport and retail and distribution didn’t fare much better. Index heavyweight CIB finished down 7.6%.
Trading was suspended for 30 minutes in the first hour of the session after the broad-based index tripped the +/-5% circuit breakers. This marks the second time circuit breakers were triggered in the past 12 months, with the most recent being when the EGX plunged following scattered protests last September.
The EGX still did better than Gulf markets: GCC equities took a hammering yesterday as investors reacted to the collapse in oil prices. Kuwaiti stocks fell more than 10%, the Qatari exchange dropped 9.7% and the Abu Dhabi and Dubai indices both lost more than 8%. The Saudi Tadawul closed 7.75% in the red.
EGP WATCH- The EGP eased 7 piasters against the greenback to 15.65 yesterday. The currency has fallen more than 1% from its recent peak of 15.49 peak on 23 February.
What’s next? Look for Egyptian stocks to move in tandem with global markets, Pharos’ head of research Radwa El Swaify and Prime Holdings’ head of research Hany Genena told Enterprise.