The Egyptian Stock Exchange indices continued their decline for the fourth week in a row, as a result of external factors, namely the increase in the returns of US Treasury bonds, which caused the withdrawal of foreign investments from emerging markets, including Egypt, and internal factors, most notably speculation on some shares of the EGX 70 index, and the increasing use of the margin buying mechanism. Wrong, and experts answer the expectations of the performance of the Egyptian Stock Exchange this week.
Dr. Mutasim Al-Shahidi, Vice Chairman of the Board of Directors of Horizon Securities, expected the continuation of the fluctuating performance of the EGX70 index during the next week, noting that even if there is a rebound in the index, it will be temporary and will continue its declining performance. As for the EGX30 index, it is expected to achieve performance. Better in light of the reported institutional support intervention from the Central Bank of Egypt to take advantage of the opportunity for some stocks to fall to attractive levels, which will constitute a strong support for the performance of the Thirty Index.
Al-Shaheedi added that there are 3 main reasons behind the loss of the Egyptian Stock Exchange for the third week in a row, and they are: First, the large volume of speculation that took place on some stocks, which formed a bubble that exploded as soon as large selling forces appeared on the Egyptian Stock Exchange, which led to a significant decline in these shares, and the matter was further increased by the fact that a large number of investors carried the burden of buying on margin, and with the retreat, the brokerage firms were forced To "Margin", which deepened the losses.
Al-Shaheedi continued that the second reason behind the decline was the sale of major shareholders in major companies whose shares were sold during the last period, led by the shareholders of Delta Sugar and Dice Readymade Garments, especially since this sale came within a short period, which led to an increase in the decline of the market. The third reason is the sale Most of the companies owning treasury shares of these shares before the expiry of the legal period estimated for one year to hold these shares, which led to a message to investors that the current stock levels are selling levels.
While Ihab Rashad, Vice Chairman of the Board of Directors of Mubasher Capital, believes that the intervention of the Central Bank to pump liquidity, whether in a fund to support brokerage companies or allocate funds to buy shares in the stock exchange, contributes to catching breaths in the capital market, and it will not witness major declines, on the contrary, it will witness reversals of some stocks that achieved a decline Sharply, noting that the Central Bank had previously announced pumping 20 billion pounds into the stock exchange, of which only 500 million pounds were spent, and 19.5 billion pounds remain, contributing to the improvement of the stock market's performance significantly.
Rashad advised investors in the stock exchange to learn from what happened during the last period, and to choose to invest in stocks based on the financial and operational performance of the shares and not based on the volume of speculation on them, and in line with his investment plan and objectives. Huge, but it causes heavy losses in limited days, and study the risks of the margin buying mechanism before using it.
For her part, Rania Yaqoub, Chairman of the Three Way Securities Brokerage Company, said that the Egyptian Stock Exchange is still looking for a bottom level before the resumption, and that what happened during the last two sessions last week was just breathtaking, adding that the main index is facing important support areas at the level of 10400 and the level of 10650 points, and it is expected that the index will move to 11000-11150 points during the current week.
In response to the Financial Supervision Authority's announcement of the agreement with the Central Bank to establish a fund to finance brokerage firms, Rania Yaqoub said that this initiative is a message of reassurance to stock market investors, that the current state of panic is not justified, and that national institutions are confident in the strength of the Egyptian economy and therefore will support the money market .
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