Egyptian stocks attract more investors amidst rumors of devaluation

Muhammed Khalid , Thursday 26 Oct 2023

The Egyptian Exchange (EGX) indices achieved unprecedented jumps during the week that ended on 26 October as devaluation rumours attracted more investors to the stock market.

EGX trading hall. Ahram Gate.
EGX trading hall. Ahram Gate.

 

Over the week, the main index surged 7.61 percent, closing at 23,262.27 points, while the EGX70 jumped 10.72 percent to settle at 4,339.30 points. The EGX100 achieved a leap of 10.64 percent, ending the week at 6,578.50 points.

Multiple factors drive the recent surge in the Egyptian stock market, including the impending EGP devaluation benefiting listed companies, Egypt's safe haven status attracting foreign investors, and growing recognition of Egyptian stocks as inflation-hedging tools, all while remaining undervalued," financial market analyst Hanin El-Mahdy told Ahram Online.

"Additionally, Egyptian citizens have become more aware of the potential to preserve and grow their wealth by investing in the EGX. Lastly, the Egyptian stock market promises higher returns than other asset classes. As an analyst, these dynamics underscore the market's resilience and potential for growth," El-Mahdy explained.

From 22 to 26 October, the market’s total trading reached a value of EGP 176.3 billion, down from EGP 235.6 billion last week.

Meanwhile, market capitalization, a measure of the total value of listed companies, jumped 7.88 percent over the week, closing at EGP 1,589 billion on Thursday. 

Speaking of the main drivers of weekly growth in the market among different sectors, El-Mahdy said that throughout the week, the EGX30 index witnessed a departure from the usual dominance of a particular company or sector. Liquidity inflow was evenly distributed across all stocks, although specific stocks captured significant investor attention.

"Amid the thriving fertilizers sector, Talaat Mostafa Group Holding (TMGH) in real estate achieved an impressive 48.4 percent growth in just one week, propelled by new acquisitions and ambitious projects. The substantial influence of Commercial International Bank (CIB), accounting for 24.10 percent of EGX30's weight, consistently contributes positively to the index," the analyst said.

"On the flip side, stocks like Ezz Steel (ESRS), ElSwedy Electric (SWDY), Sidi Kerir Petrochemicals (SKPC), Orascom Construction PLC (ORAS), and Alexandria Containers and Goods (ALCN) remain vulnerable to economic conditions and the fluctuation of raw material prices, impacting their long-term profitability and playing a role in EGX30's overall performance," El-Mahdy concluded.

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