Egypt stocks leap on interest rate cuts, political consensus

Ahram Online, Sunday 8 Dec 2013

EGX30 gains 2.4 percent after CBE lowers lending and deposit rates for third consecutive time, Salafist Al-Nour party endorses draft constitution

Egypt stocks
Traders work at Egypt's Stock Exchange in Cairo (Photo: Reuters)

Egypt's main index leaped 2.39 percent to reach 6,483 points on Sunday, as investors reacted to seemingly positive economic and political news.

In an unexpected move reflective of its confidence in the future of Egypt's economy, the Central Bank of Egypt's Monetary Policy Committee (MPC) cut interest rates for the third consecutive time this year on Thursday.

The MPC lowered the deposit and lending rates by 50 basis points to reach 8.25 percent and 9.25 percent respectively. It also lowered its discount rate and the rate it uses to price one-week repurchase and deposit operations to 8.75 percent.

The market was also buoyed by the ultra-conservative Al-Nour party's announcement that it would urge its constituency to vote in favour of the country's new constitution in the upcoming referendum, Ashraf Abdel Aziz, head of institutional sales at the Cairo-based Arabia Online Securities, told Ahram Online

The final draft of the amended constitution was submitted for approval on Tuesday to interim President Adly Mansour, who is expected to put it to a popular referendum in January.

There had been doubts surrounding the Salafi party's support of the interim constitution, given previous disagreements between its representatives and the rest of the constituent assembly on articles relating to the implementation of Islamic Sharia.

Al-Nour was the second largest bloc in Egypt's 2012 post-revolution parliament, after the Muslim Brotherhood's Freedom and Justice Party, from which ousted president Mohamed Morsi hailed.

Egyptian investors were net-sellers on Sunday, while foreign investors were net-buyers for the combined value of LE5.6 million at a session which saw turnover of listed stocks surpass LE351 million.

Market bellwether Commercial International Bank, which distributed a stock dividend of 0.5 shares for each underlying share in the last trading session on Thursday, soared by over 5 percent.

Real estate shares TMG Holding, Six of October Development & Investment (SODIC) and Palm Hills Development Company rose by 2.28 percent, 0.96 percent and 0.78 percent, respectively.

Investment bank EFG-Hermes saw its share price gain 1.43 percent, and Global Telecom Holding rose 1.10 percent.

The broader EGX70 index climbed 0.79 percent.


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