Egypt shares to sustain gains as Central Bank leaves interest rates unchanged

Daily News Egypt
8 Min Read

Egypt shares are expected to move upwards in the short term bolstered by a fresh interest from foreign investors, after the Central Bank of Egypt (CBE) left interest rates on hold in its monthly meeting last Thursday.

The CBE has decided to maintain interest rates unchanged, according to the monetary policy statement, a move that was widely expected with developments delaying the move towards a more accommodative policy.

The Monetary Policy Committee (MPC) met on Thursday and kept the overnight deposit rate, overnight lending rate, and the rate of the main operation at 16.75%, 17.75%, and 17.25%, respectively.

The discount rate was also kept unchanged at 17.25%

“Annual headline inflation rose to 14.2% in August 2018 from 11.4% in May 2018, while annual core inflation continued to decline for the twelfth consecutive month to record 8.5% in July 2018, before increasing slightly to 8.8% in August 2018,” the statement noted.

Last week, the Egyptian Exchange (EGX) recovered from the huge losses recorded the week before.

Benchmark index EGX 30 gained 3.8% or 548.9 points, and closed at the level of 14,632.40 points.

The small and medium sized enterprises index increased by 2.3% to 698.78 points, while the broader index EGX 100 added 2.5% and closed at the level of 1,784.85

Market capital rose by EGP 21.8bn, ending the week at the level of EGP 801.9bn.

Two weeks ago, EGX 30 dropped 8% and ended the week at the level of 14,083.48 points, with losses amounting to 1,225 points.

Analysts contributed the losses of the Egyptian Exchange to local and global factors, after the Cairo Criminal Court ordered the arrest of Gamal and Alaa Mubarak, as the two sons of former President Hosni Mubarak were accused of stock manipulation, while global markets remain concerned with the rising trade war tensions between the United States and China.

Meanwhile, Credit Agricole Egypt’s board of directors agreed to write off its debts in accordance with the notes.

The board also decided to reshuffle some of its committees, as well as approved credit requests, the bank highlighted in a filing to the EGX on Thursday.

Credit Agricole previously reported a 15.2% year-over-year rise in net profits for the first half of 2018, recording EGP 1.09bn from EGP 949.03m.

Revenues from interests grew by 17.4% to EGP 2.6bn in the six-month period ended June, versus EGP 2.22bn in H1-17.

Meanwhile, Orascom Investment Holding’s board of directors has hired a financial advisor, BDO Corporate Finance, to evaluate the shares of Nile Sugar Company.

The board also agreed to negotiate over a possible acquisition of the entire shares of the Egyptian sugar refiner, Orascom said in a filing to the EGX on Thursday.

This comes within the framework of Orascom’s strategy to enter the food industry business.

Orascom announced earlier last week, it was in talks to acquire a factory for juices and dairy production.

In other company news, Palm Hills Development Co’s board has approved an EGP 485m financing offer made by Arab African International Bank (AAIB) and Banque Misr to develop the Palm Parks project.

The board has also agreed to all the terms of financing and signed collateral documents and all other documents related to the loan.

In August, Palm Hills denied negotiating fresh credit facilities with the National Bank of Egypt (NBE) in a response to what was mentioned in one of the local newspapers.

The company’s board previously agreed to raise authorised, issued, and paid-up capital earlier this month, boosting authorised capital to EGP 10bn from EGP 6bn.

The Egyptian real estate firm’s board also noted to increase issued capital by EGP 1.53bn to EGP 6.15bn from EGP 4.6bn by inviting major shareholders to a subscription through issuing 769.6m shares at par value of EGP 2, in addition to the expenses of issuance.

Meanwhile, Elsewedy Electric announced that a consortium of its subsidiary, Elsewedy Electric for Trade and Distribution, and two other companies won an EGP 138m contract for the development of the regional control centre in the Canal cities.

The consortium’s two other firms comprise ABB Switzerland and ABB Arab, the company said in a filing to the EGX.

Upon the contract, the alliance will supply, install and conduct tests to develop the international arbitration centre in the canal cities for approximately 115 substations within six governorates, the Egyptian cable maker indicated.

The project will cover developments in the governorates of Sharqia, Ismailia, Suez, Port Said, Red Sea, and the North and South Sinai, according to the filing.

The contract is set for execution within 12 months as of 25 September, the date of the deal signing, the company stressed.

In other news, the extraordinary general meeting (EGM) of Orange Egypt for Telecommunication has agreed to optionally write off the company’s shares from the EGX.

The EGM approved to buy shares of shareholders negatively affected by the optional write-off, including mortgagee creditors, in accordance with article 55 of the listing rules.

Procedures of the optional write-off are expected to be completed and submitted to EGM by the end of December, the company added.

In July, the listing committee at the EGX called the main shareholder in Orange Egypt to write-off the company’s shares from the EGX optionally.

In IPO news, the Egyptian Exchange said that the initial public offering (IPO) of Cairo Investment and Real Estate Development was oversubscribed by 18.87 times.

Purchase orders totalled 273.78 shares, the bourse said in a statement on Tuesday.

The company has set an indicative price ranging between EGP 5.45 and EGP 6.3 per share to its stake offered for listing.

The value of shares ranged between EGP 3bn and EGP 3.45bn prior to the IPO, but the company revealed earlier that final price has been set at EGP 6 per share.

Trading on the stock is set to commence as of 1 October.

The Financial Regulatory Authority recently approved to publish the offering bulletin for Cairo Investment to sell a 37.84% stake of the company’s capital.

In August, Cairo investment announced it was intending to float a 37.84% stake, or up to 207.2m shares, on the EGX.

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