Traders work at Egypt's Stock Exchange in Cairo (Photo: Reuters)
Egypt's main index was up on Tuesday as daily turnover picked up after Egypt's government received the backing of international credit rating agency Fitch Ratings in its recent price hikes on fuel.
In a statement entitled "Egypt's Fuel Price Hikes Are Positive for Credit Profile" released earlier on Tuesday, the rating agency praised the price increases on state-subsidised fuels introduced by Egypt's government last week as "an important step towards reducing subsidies that contribute to Egypt's substantial fiscal deficit – a key rating weakness."
On Friday, Prime Minster Ibrahim Mehleb's cabinet raised the prices of three widely-used fuels by as much as 78 percent, as part of a plan to cut LE44 billion from Egypt's would-be fuel subsidy bill this coming year.
The benchmark EGX30 index rose 1.41 percent to 8,429 points, with daily turnover rallying to LE741 million as investor appetites reacted swiftly to Fitch's approval of Egypt's economic path.
"The news provoked a positive response from foreign investors, who emerged as strong net-buyers during the session," says Mohamed Radwan, head of equities at Cairo-based Pharos Securities.
A sense of anxiety surrounding the economic and political impacts of the price hikes, which are expected to drive inflation into the double digits in a country where some 26 percent of the population lives under the poverty line, had kept investor activity muted earlier this week, an analyst told Ahram Online.
Daily turnover picked up to register LE741 million as foreign investors were net-buyers to the tune of LE100.4 million.
Egyptian institutions were also net-buyers, as they built new positions with the start of the new fiscal year, which began on 1 July, explained Radwan.
Market bellwether Commercial International Bank (CIB) rose 0.70 percent to trade at LE36.16.
In the telecom sector, telecom Egypt was up 0.90 percent to trade at LE13.51 a share, while Orascom Telecom Media and Technology Holding (OTMT) rose 0.79 percent to LE1.27 a share.
Global Telecom Holding rose 1.13 percent to LE5.37.
In real estate, Palm Hills Development Company saw its share price rise by 1.21 percent to LE4.17, while Six of October Development and Investment Company (SODIC) gained 1.68 percent to LE37.46.
TMG Holding rose 3.55 percent to trade at LE9.04.
Investment bank EFG-Hermes, on which a tender offer at LE16 a share fell through on Sunday when bidders failed to received the requested 20 percent stake, saw its share price continue to fall – down by 0.20 percent to LE14.96.
According to Reuters, the bidders, a consortium led by Egypt's Beltone Financial Holding and Egyptian tycoon Naguib Sawiris, were only offered 48 percent of the shares they were seeking.
The board of EFG-Hermes had resisted the tender, hiring an independent financial advisor which set the fair share price at LE22.93.