Egypt’s stock market is up more than 3,000 points since the pound’s fall, with these sectors leading its gains

Dubai, United Arab Emirates (CNN) – The main index of the Egyptian Stock Exchange rose by more than 3,000 points since last October 27, following the decision of the Central Bank of Egypt to introduce a flexible exchange rate system for the Egyptian pound against foreign currencies, and the market capitalization increased by 170 billion pounds ($6.9 billion), surpassing the level of 890 billion pounds ($36.2 billion), and average daily trading jumped to more than 1.6 billion pounds ($65.1 million).

Money market experts attributed the rise to improved investor sentiment on the performance of the Egyptian stock market in the coming period following the depreciation of the Egyptian pound and the government’s interest in encouraging money market investment, noting that the banking, real estate and petrochemical sectors are leading the stock market’s rise during the current period.

Last month, the International Monetary Fund agreed to lend Egypt $3 billion as part of a $9 billion financing package from development partners. The Central Bank of Egypt made several decisions, the most significant of which are a 200 basis point increase in the interest rate, the gradual abolition of the documentary letter of credit system until its complete abolition in December, and the implementation of a flexible exchange rate system for the Egyptian pound in relation to foreign currencies.

Financial markets expert Hanan Ramses said that there is a state of optimism among stock market traders, especially Egyptian investors, as a result of the tendency of institutions to form buying centers for all stocks, whether leading or small and medium, following the government’s interest in the money market by changing the responsible management, and by announcing the intention to launch state-owned companies and issuing decisions. Encouraging trading, in addition to the demand of Arab investment funds for the purchase of shares or the purchase of listed companies.

According to stock exchange data, Egyptian investors took the lead with 76.5 percent of the trading value of listed shares since the beginning of the year, followed by foreign investors with 15.3 percent and Arab investors with 8.2 percent.

In exclusive statements to CNN Arabic, Ramzes highlighted the role of Gulf takeover bids for listed Egyptian companies by taking advantage of the drop in their market value and the fall in the pound, which encouraged stock market traders to increase trading to take advantage of rising stocks or sell them to acquiring companies with good returns. She also pointed out that the depreciation of the pound against the dollar increased the purchasing power of Arab and foreign investors and raised the level of liquidity on the market.

The exchange rate of the pound against the dollar has fallen by more than 25 percent since October 27, and the dollar recorded 24.53 pounds for buying and 24.60 pounds for selling on Thursday.

Hanan Ramses believes that investing in the Egyptian stock market is currently the highest return for citizens in Egypt who are facing high inflation. She said that this has appeared in the recent period with the entry of many new investors and profits from the jumps in share prices, and many stagnant portfolios have begun to return to trading and update data to return to trading again.

During yesterday’s session, Wednesday, the Egyptian Stock Exchange recorded 88.3 thousand transactions, which is the highest rate of executed transactions it has witnessed since June 2009. The exchange also witnessed, during the same session, trading values ​​of 3.5 billion pounds ($142.5 million), which is the highest level since May of this year.

An expert on financial markets said that the main index of the Egyptian Stock Exchange is targeting a level of 13,800-14,000 points by the end of this year, and he linked its achievement to the continuation of the activities of institutions on the stock exchange during the rest of the year. year and the inability of institutional managers to reap profits before the closure of financial centers, noting that the real estate, banking and electronic payment sectors will lead the rise of the stock market during the coming period.

The main index of the Egyptian Stock Exchange rose by 2.87% in the session on Thursday, reaching the level of 13,639 points, the highest level it has reached since February 2020.

Mohamed Hassan, director of Blom Egypt, attributes the rise of the Egyptian stock market to several reasons, first of all the application of a flexible exchange rate system of the pound against the dollar, explaining that the depreciation of the pound led to an increase in demand for buying shares after they reached attractive price levels, along with the revaluation of listed assets companies Second, the acquisition of shares by Gulf state funds in listed companies.

Last August, the Saudi sovereign wealth fund acquired minority stakes in 4 government companies listed on the Egyptian Stock Exchange, worth $1.3 billion, and was preceded by the acquisition of a stake by the UAE sovereign wealth fund worth nearly $2 billion.

Hassan added, in exclusive statements to CNN in Arabic, that the third reason for the rise of the stock market is the expectation of a fall in the inflation rate at the beginning of next year and the fixing of the interest rate, which motivated investors to seize investment opportunities in the money market, and fourth, the listed companies achieved significant growth in profits, especially those that have dollar earnings from exports, such as fertilizer and petrochemical companies, he said.

Mohamed Hassan expected a continuation of the upward trend of the Egyptian stock market in the medium term, on the basis that the main index of the stock exchange exceeded the resistance level at 12,500 points, with the condition that the uptrend will be interspersed with profits. taking jobs in short periods that can reach a week, but the main index of the stock market will continue to rise to exceed the level of 14 thousand points by the end of the year by more than 20%.

He pointed out that the sectors of real estate, banking, financial services and petrochemicals lead the rise of the Egyptian Stock Exchange during the current period, as a result of the revaluation of the assets of some of these companies, and the expected increase in their profits from dollars.