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Market Report: Egypt shares soar 7pct after 25 January demonstrations

Main index sees its biggest rise in a decade as Wednesday's peaceful protests prompt the return of investors keen to benefit from cut-price shares

Ahram Online, Thursday 26 Jan 2012
A staff member of Egypt's stock exchange follows a monitor at the trading hall (Photo: AP)

Egyptian stocks soared to a three-month high on Thursday, a day after countrywide demonstrations to mark the first anniversary of the revolution passed off peacefully.

The benchmark EGX30 jumped 7.2 per cent to close at 4,433 points, its largest single-day increase in a decade, as the promise of political stability prompted investors to snap up bargain-priced shares.
"No-one can deny that Egypt’s market is very attractive in terms of prices," Walaa Hazem, vice president for asset management at HC Securities & Investment, told Ahram Online. 
"Political worries were preventing investors from taking opportunities in the market but this is changing now."
Turnover, which fell to a 10-year low in late December, rocketed to LE654 million ($109 million) on Thursday.
Egypt’s Bourse saw one of its toughest years in 2011 with the main index losing around 40 per cent of its value. The start of 2012, however, has brought a wave of optimism, fuelled by the opening of Egypt's first freely elected parliament. 
The EGX30 has climbed around 22 per cent since 1 January, despite fears that anniversary demonstrations planned for 25 January would usher in another period of violent unrest.
Thursday's main buyers were foreign investors, who made up 28 per cent of the session's trade and snapped up a net LE56 million in shares.
"Foreigners have been net- buyers since the beginning of the year, they aim at making new long-term positions," Hazem explained. "Our market is one of the cheapest in the world and foreigners want to benefit from that."
All but four of the day's 185 traded shares finished in the green, with some of its highest-cap stocks seeing the biggest gains.
Shares in Orascom Construction Industries (OCI), Egypt's largest firm, climbed 6.3 per cent, while Orascom Telecom Holding and Commercial International Bank gained 9.8 and 9.4 per cent respectively.
Their performance was mirrored by industrial giants, Ezz Steel, EFG Hermes and the Talaat Moustafa Group, which finished up 9.58, 7.7 and 9.41 per cent respectively.
The day's gains have been touted by Egyptian authorities as a sign the Bourse is making a strong recovery, but those dealing with the market are more cautious.
"I'm not bearish exactly, but economically and politically nothing has changed," Taymour El-Derini, a trader with Naeem Holding told Ahram Online.
"Parliamentary sessions are taking place and yesterday's protests were peaceful but the [economic] numbers are the same. We still have monthly falls in reserves, unemployment is on a high, the devaluation of currency is still hanging -- all that has changed today is the [market] sentiment."
Presidential elections and agreements on long-delayed foreign loans are among the issues that could spur a genuine recovery, he said.
El-Derini expects a gradual "pullback" when the market reopens on Sunday and selling pressures build.
"We might see one or two days of gains and then the market might see some sellers," he said. "The market isn't going to continue at this rate, especially given [Egypt's] poor numbers and low growth prospects."
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