Egyptian Exchange recovers early losses at week's end as IPO news reassures market

Muhammed Khalid , Thursday 13 Jul 2023

The Egyptian Exchange (EGX) indices saw mixed performance during the week ending on 13 July—the week started with declines caused by concerns over the current fiscal gap in Egypt and the economy's downgrade on the MSCI index.

EGX trading hall. Ahram Gate.

The benchmark index, EGP30, rose 1.4 percent over the week to 17.342.3 points, while the EGX70 declined by 0.75 percent to 3,428.07 points.

"On Sunday, the market took a blow, and the benchmark dropped by 3.2 percent to 16,555 points, as concerns spread regarding the dollar shortage and the downgrading of the Egyptian economy from emerging to frontier market by Morgan Stanley Capital International (MSCI)," Mohamed Hassan, Investment Funds Director at Odin Investments, told Ahram Online.

The EGX100 slipped 1.2 percent this week to 5,084.4 points. The EGX50 inched lower 0.65 percent to 3,161.6 points.

"However, with the government's announcement of selling EGP 1.9 billion of state-owned assets on Tuesday, the market rebounded. By the end of the week, the EGX30 index recovered 1,000 points of its early loss," Hassan added.

"The market will see positive performance next week. The benchmark could break above 17,600 points, while the EGX70 could exceed 3,550 points," Hassan expected.

Egyptians lead the market

Over the week, the market capitalization reached EGP 1.168 trillion, up by around 3.16 percent from the previous week.

The trading value during the week's five sessions totalled about EGP 15 billion through 340,000 deals on 3.87 billion shares.

Egyptians controlled 86.4 percent of the total market trades throughout the week, while other Arabs and non-Arab foreigners and Arabs made up 7.1 percent and 6.6 percent, respectively.

Why do investors fear MSCI's move?

In June, MSCI announced it may consider downgrading Egypt's classification from an Emerging Market to a Frontier or Standalone Market if the country's foreign currency shortage continues.

MSCI is a US-based capital market company that provides equity, fixed income, and real estate indexes, measuring market performance in developed and emerging markets to help investors make informed decisions.

MSCI added Egypt to its indices in August 1997. The MSCI Egypt Index covers approximately 85 percent of Egypt's equity universe.

Egypt's net foreign assets (NFAs) deficit increased to $24.42 billion in March 2023, compared to $22.76 billion in February. NFAs are the sum of foreign assets held by monetary authorities and deposit money banks.