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Market Report: Egypt bourse gains in slowest day in a decade

Fears of a global recession and lowered trade during Ramadan slowed the pace of the Egyptian bourse, though it finished slightly up

Ahram Online, Sunday 14 Aug 2011
Bourse
A napping trader in Egypt's stock exchange (Photo: Reuters)
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Beset by uncertainty, the Egyptian bourse gained modestly Sunday while total market turnover dropped to LE226 million, the lowest figure in a decade, according to the MENA state news agency.

The EGX30, the market’s main index, edged 0.73 per cent to reach 4,626 points.

The market has been fluctuating over past week on worries of a global economic meltdown following the US credit rating downgrade, where the index fell to its lowest levels since 2008.

It seems that the uncertainty will be carried through this week as well, given the low turnover of today’s three-hour trading session.

“This [turnover] was even lower than the day of Mubarak’s trial, which could be very alarming,” says Ashraf Abdel Aziz, head of institutions sales at Arabeya Online Securities.

The trial of Egypt's former president on 3 August cast a shadow on the country's stock market as traders joined millions of rapt viewers in following the television coverage. Turnover bottomed to a low of LE239 million for that day. 

“When average turnover fluctuates around LE350 million, its normal for it to fall to LE225 million or even lower,” Abdel Aziz adds.

Ramadan, the Muslim holy month, usually witnesses reduced work schedules and vacations across the business and investment community in Egypt, which reflects also in lowered bourse activity.

Abdel Aziz sees the fluctuation as normal. However, he worries that such low levels could become the norm, even after Ramadan.

“It is very hard for investors to make new positions in the market, given uncertainty in international, regional as well as domestic circumstances.”

The broader EGX70, characterised by individual speculative trading, gained 1.46 per cent, almost double the EGX30. The hike is a reflection of the trading structure of today’s session whereas individuals contributed to around 80 per cent of total trading.

Foreigners' share, usually floating around 15 to 25 per cent, dropped to a meagre seven per cent. finishing up as net sellers. Egyptians comprised 86 per cent of trading volume and were also net sellers at LE6 million.

Out of 171 share holdings traded today, 107 gained while 51 finished in the red.

Abou Kir Fertilisers and Chemical Industries, the fifth largest company on the exchange, witnessed the day’s largest gains of 9.7 per cent to reach LE236.4 per share.

The price hike was driven by the approval of a capital increase raising the company’s paid in capital to LE1.26 billion. It will be achieved through a share dividend distribution, equivalent to two free shares for every three shares owned.

“The market has been awaiting such a move on Abou Kir Fertilisers for a long time. The company’s share will become more liquid, inviting a different investor strata to trade and invest in it,” Abdel Aziz adds.

Orascom Construction Industries surged by 1.34 per cent to reach LE247.8 per share.

Other big caps witnessed modest growths as Orascom Telecom gained 0.31 per cent, Commercial International Bank 0.68 per cent and Telecom Egypt 0.07 per cent.

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