Egypt's bourse picked up on Sunday after the government announced an official date for the conclusion of a much-anticipated $3.2 billion loan from the IMF.
The benchmark EGX30 index gained 2.94 per cent to close at 5,113 points, recording a new six-month high. The broader EGX70 index, meanwhile, also gained 1.8 per cent for the day.
"The market is reacting positively to news of the loan," Mohamed Metwally, equity trader at the Cairo-based Prime Securities, told Ahram Online. "Investors are more hopeful now about Egypt's economy."
Egypt's finance minister on Sunday said the country expected to sign a $3.2 billion loan agreement with the International Monetary Fund (IMF) in March, and would receive one-third of the funds immediately upon signing.
Some observers say the loan is essential to shoring up Egypt's ailing economy, given the slow-but-steady erosion of the country's foreign-currency reserves over the past year.
According to the finance minister, the loan – which will bear an interest rate of 1.2 per cent – will be used to support Egypt's 2012/13 budget and offset the depletion of Egypt's foreign reserves.
"With the IMF loan in place and presidential elections around the corner, investors are expressing more confidence in Egypt – both politically and economically," Metwally said.
Of 186 shares listed on the exchange, 156 gained on Sunday while 24 fell in value.
Orascom Construction industries (OCI), the market's largest share in terms of market capitalisation, gained 3 per cent to close the day's trading at LE259.52.
Orascom Telecom Holding (OTH), Mobinil, and Commercial International Bank, meanwhile, also all rose for the day by 3.2, 2.45 and 2.66 per cent respectively.
Real estate was one of the best performing sectors on Sunday, rising by a total of 4.19 per cent. This was driven by growth in shares of the Talaat Mostafa Group by 4.4 per cent; the Amer Group by 8.1 per cent; and Palm Hills Development by 7.8 per cent.
"Real estate shares are extremely undervalued," Metwally explained. "Some of the sector's shares are trading at less than half of their fair values."
Several Egyptian real estate companies were hit with lawsuits over their land banks following last year's ouster of longstanding president Hosni Mubarak and his regime. Accordingly, many of these shares have since lost considerable value.
In Sunday's trading session, Egyptian investors accounted for the majority – some 80 per cent – of the day's LE662 million (roughly $110 million) worth of transactions. They represented net sellers at LE4 million.
Overall, observers expect the current market upswing to continue in the absence of additional economic or political crises.
"The buying force in the market is much stronger than the selling force," Metwally told Ahram Online. "We expect the EGX30 to edge up to 5,600 points if things remain stable."
Foreign investors accounted for 15 per cent of the day's total trading, typical for a Sunday. They were net buyers at LE2.3 million.