Egypt's stock exchange is bouncing back into the green as the government edges closer to agreeing a controversial $3.2 billion IMF loan (Photo: Reuters)
Egypt stocks saw a further boost on Tuesday with across-the-board gains and a significant rise in turnover as investors took a visit from the International Monetary Fund as a sign the economy is getting back on track.
The EGX30 benchmark gained 1.17 per cent to close at 3,877 points, drawing closer to the key support level of 4,000. The broader EGX70 edged up a further 0.63 per cent to alight at 418 points.
"The positive outlook for Egypt's economy is being reflected in the Bourse,” Issa Fathy, vice president of the securities division in Cairo’s Chamber of Commerce, told Ahram Online.
An IMF delegation arrived in Egypt on Monday to restart discussions over a contentious US$3.2 billion loan. The visit has raised hopes among some commentators that the Egyptian economy may be on its way to recovery.
"The effect of the IMF visit can be seen in foreign investors being net-buyers over the past seven or eight sessions," Fathy said.
Foreigners bought a net total of LE29.4 million worth of stocks on Tuesday. They made up around 21 per cent of the day’s LE258 million turnover.
"The Bourse could only recover through the injection of fresh funds. Today's turnover is very promising," Fathy said.
The uptick in turnover comes after a month of torrid trade. During the Christmas season, average market volumes plummeted below LE100 million, their lowest level in 10 years.
Basic resources and real estate led the market with sector growth of 3.94 and 2.97 per cent respectively.
Ezz Steel climbed a further 5.41 per cent to close at LE4.68 per share; it was one of several firms directly affected by a new government initiative to bring an end to disputes regarding factory licenses.
Real estate also saw a boost from the government’s announcement it will not withdraw any disputed lands from developers but will instead work to settle disagreements outside the courtroom.
Shares such as the Talaat Mostafa Group, Palm Hills Development and the Amer Group gained 3, 2.5 and 3.51 per cent respectively following the news.
"If the government had made these moves earlier,= it could have spared the stock market a lots of losses from the uncertainty," Fathy said.
Telecom Egypt (TE), the country’s landline monopoly, saw its shares gain 1.63 per cent to close at LE14.34. Earlier on Tuesday the firm announced plans to issues dividends of 30 piastras ($0.05) per share on deferred profits.
Egyptians dominated trading with 75 per cent of turnover, selling a net total of LE23 million. Arab investors took a similar position, offloading some LE7 million.
From the 168 stocks traded on Tuesday, 113 gained in value and 39 declined.
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