Market participants consider this corrective movement to be logical, given the robust gains witnessed by the Egyptian stock market throughout 2023. However, the EGX30 index, which tracks the performance of the 30 most actively traded companies, experienced a decline of 1.67% during Monday’s session. It erased its morning gains, falling from 28,944 points to 28,144.2 points, with local institutions engaging in profit-taking. The net sell-off amounted to EGP 826.7m.
Hany Tawfik, an economic expert and Chairman of International Investors Group, Inc., emphasizes that the recycling of liquidity from the Egyptian stock market into government debt instruments underscores the EGX’s transformation into a store of value for individuals. The market is no longer solely driven by the financial analysis of listed companies.
The EGX70 EWI, which measures the performance of medium and small-sized companies, declined by 1.08%, settling at 6,544.9 points. Meanwhile, the broader EGX100 EWI, tracking the 100 most actively traded companies, saw a 1.31% decrease, settling at 9,284.2 points.
Mohamed Abdel Hakim, Head of the Research Department at Ostoul Securities Brokerage, attributes the selling pressure on stocks to the recent rise in interest rates. Investors have redirected their liquidity toward government debt instruments.
Abdel Hakim anticipates a downward correction in the coming period, with the EGX potentially reaching the 25,000-point level due to ongoing selling pressures. He advises investors to mitigate risks by avoiding margin buying during this time.
During Monday’s trading, a total of 764 million shares were exchanged, amounting to EGP 3bn, across 78,600 transactions. Among the shares traded, 29 rose, 113 fell, and 63 remained unchanged.
CI Capital Brokerage’s research suggests that the strong momentum of the stock market will slow down in the near term due to rising interest rates. Investors are likely to shift their focus toward fixed-income instruments rather than directing funds solely to the stock market.
In terms of individual stocks, several experienced fluctuations:
· Decliners included Talaat Moustafa Group Holding, Qalaa Holding, Ezz Steel, and Palm Hills falling by 2.59%, 2.51%, 0.44%, and 2.54%, respectively, to close at EGP 62.5, EGP 3.49, EGP 65.5, and EGP 3.84, respectively.
· The biggest gainers were Golden Tex and Egyptian Resorts Company, rising 19.99% and 10.04% to settle at EGP 32.71 and EGP 5.59, respectively. Shares of Ibn Sina, Zahraa Maadi, and New Ismailia also rose by 5.84%, 5.3%, and 4.9%, respectively, to settle at EGP 2.9, EGP 7.55, and EGP 21.39, respectively.
· The biggest losers during the session were Medical Packaging, down 6.99%, while shares of Telecom Egypt, Credit Agricole Bank, and Ataqa fell by 5.16%, 4.21%, and 4.12%, respectively.
Mostafa Al Kurdi, Group Manager at Arab African International Securities, said that the main EGX30 index is expected to undergo a strong corrective movement if the key support level of 26,400 points is broken, expecting it to move between a wide sideways range of 27,000-30,000 points.
Al Kurdi added that the corrective movements are a reflection of the strong gains seen by the Egyptian Exchange over the past year. He also added that breaking the 30,000-point level upwards is a positive indicator for the end of the corrective movement, advising investors to focus on stocks with strong financial positions and stay away from margin purchases.