Egypt’s stock market is expected to move upwards in the mid-term as the earnings season start in full swing, with most companies reporting better than expected results for the three-month period ending last December.
Ayman Fouda, head of the capital market committee at the African Economic Council, projected that the Egyptian Exchange (EGX) would carry on the upward trend in the short-term.
The benchmark EGX30 index is still moving sideways in the medium-term, Fouda said, adding that the index has a short-term resistance at 14,150 and 14,260 points and has support at 14,005 and 13,930 points.
Meanwhile, the small- and mid-cap EGX70 index has a short-term resistance at 695 and 705 points, and support at 677 and 669 points.
For his part, head of technical analysis at Arab Finance Securities, Osama Naguib, said that the EGX30 index hovers around 14,100 points amid high trading volume.
The EGX30 index has main support at 13,600 and 13,450 points, but it will continue seeing support at 13,300 and 13,225 points in the meantime, Naguib highlighted.
The indices of the market have seen a bullish trend during the last week of January ended Thursday as the Egyptian pound rose against the US dollar.
The benchmark EGX30 index rose 4.5%, or 620.03 points, finishing the week at 14,126.68 points, versus 13,506.65 points the week before.
Meanwhile, the small- and mid-cap EGX70 added 1.7% to 683.84 points.
The broader EGX100 closed the week 1.6% up at 1,722 points, compared to 1,695.10 points last week.
Market capitalisation gained EGP 28.11bn and closed this week at EGP 793.4bn, versus EGP 765.29bn last week.
The heavyweight Commercial International Bank (CIB), up 0.62%, closed the week at EGP 83.01, with a turnover of EGP 419m exchanged through 5.012m shares.
In January, the EGX gained over 1,000 points in January, boosted by a group of incentives.
The benchmark EGX30 index went up 8.5% to 14,126.68 points, whereas the EGX70 index lost 1.4% to 683.84 points and the EGX100 decreased by 0.25% to 1,722.86 points.
Over the month, market capitalisation grew by EGP 43.6bn ($2.47bn) to EGP 793.4bn.
The EGX saw a group of incentives toward the end of the month, including the increase in the EGP’s exchange rate against the US dollar.
Earlier in January, the Central Bank of Egypt’s (CBE) governor Tarek Amer stated that the EGP would see more volatility.
The CIB’s stock surged 12.05% to EGP 83.1.
In earning news, Egypt Aluminium reported a 34% year-over-year (y-o-y) decline in profit for the first half of fiscal year (FY) 2018/19.
Net profits amounted to EGP 758.3m in the six-month period ended December, versus EGP 1.15bn in the prior-year period, the company said in a filing to the EGX.
Revenues surged to EGP 7.02bn at the end of December, from EGP 6.29bn in the corresponding period of FY 2017/18.
Egypt Aluminium previously posted a 34% y-o-y drop in profit for the first quarter (Q1) of FY 2018/19 due to higher cost of production.
Net profits stood at EGP 468.9m in the three-month period ended September, versus EGP 712.3m in the prior-year period.
Revenues rose to EGP 3.6bn at the end of September, from EGP 3.1bn in the same quarter of FY 2017/18.
Meanwhile, Juhayna Food Industries on Thursday announced that its board of directors has recommended the distribution of EGP 188.2m in cash dividends, or 20 piasters per share, for 2018 to shareholders.
The proposal will be discussed by the ordinary general meeting (OGM), according to a filing to the EGX.
Juhayna also reported a 107% y-o-y hike in its consolidated profits for 2018, recording a net profit of EGP 408.24m from EGP 197.7m in 2017.
The Egyptian company’s sales surged to EGP 7.12bn last year, versus EGP 6.06bn the year before.
In the same context, Heliopolis Company for Housing and Development reported a 17.8% y-o-y decline in net profit for the first half (H1) of FY 2018/19.
Net profit reached EGP 48.6m in the six-month period ended last December, versus EGP 59.2m in the prior-year period, the company said in a filing to the EGX.
Revenues surged to EGP 383.3m in H1 of 2018/19, from EGP 309.7m in the corresponding period a year earlier.
The Egyptian real estate firm ascribed the six-month profit decline to an increase in the cost of banks’ credit facilities, in addition to the financial leasing installation worth EGP 34m.
Additionally, the growing spending on the company’s long-term investment in the facilities of New Heliopolis city, the statement added.
In October, Heliopolis Housing reported that its net profit dropped by 88.6% to EGP 8.7m in Q1 of FY 2018/19, versus EGP 76.8m in the prior-year period.
In other company news, Global Telecom Holding’s (GTH) board of directors has approved to extend the maturity period of the $100m revolving loan facility from Netherlands’ VEON Holdings BV, GTH’s majority shareholder.
The maturity period has been extended for an additional three months starting 28 February under the same terms and conditions, GTH said in a statement to the EGX.
Earlier last week, GTH announced that its board of directors postponed its planned OGM related to an EGP 11.2bn proposed rights issue to 27 March as a result of receiving a letter of support from the Dutch company.
The letter, requested by GTH, highlights “the option of taking GTH private to support its immediate funding requirements related to the servicing of certain debt obligations and an interest payment to external bondholders.”
Earlier this month, VEON announced it would maintain acquisition talks with GTH.
In November, the FRA said that a mandatory tender offer was submitted to buy 42.31% of GTH’s capital at EGP 7.9 per share.
In May, GTH’s board approved a $100m temporary rise in revolving credit facility agreement with VEON.
In April, GTH disclosed that the Amsterdam-based VEON Ltd, its main shareholder, notified the FRA that it had withdrawn its mandatory offer to buy the remaining stake in the telecommunications company, explaining that time passed without getting any approvals.
Meanwhile, Raya Holding for Financial Investment announced that its subsidiary Bariq Technologies Industries is considering expanding in order to double its production capacity.
Bariq will pump up to EGP 250m in investments in the coming period as part of the expansion scheme, Raya said in a statement to the EGX.
Bariq aims to double production capacity by adding new production lines to its factory in the Sixth of October City and upgrading its infrastructure, as well as training employees and workers there, according to the statement.
Raya, which holds 100% of Bariq, previously said it was seeking to expand overseas along with maintaining new investments in the local market.