print logo

Business Recorder: Egypt bourse surges to fresh eight-year high, Gulf markets diverge

Twenty-seven of the 30 most liquid Egyptian shares rose, taking the index to a fresh eight-year high.
21.12.16 | Interesting article at Business Recorder

Egypt's stock index surged 3.1 percent in heavy trade on Monday as the Egyptian pound depreciated against the US dollar, prompting more buying by foreign funds, while Gulf bourses diverged. Twenty-seven of the 30 most liquid Egyptian shares rose, taking the index to a fresh eight-year high, with Telecom Egypt and Global Telecom Holding each jumping to their 10 percent daily limits.

The Egyptian pound was being bought for 19 pounds per dollar against around 18.8 earlier in the day on the back of higher demand for the greenback amid a shortage at banks, bankers told Reuters. Foreign investors were net buyers of Egyptian stocks by a modest margin, bourse data showed. Overall, many investors consider currency weakness a positive for the stock market in the short term because it makes prices more attractive for foreign investors, and may drive local funds into stocks as a hedge against inflation.

"The dollar rate is keeping up the appetite" for stocks among foreign funds, said Wafik Dawood, portfolio manager at Compass Capital. Also boosting sentiment was news that Banque Misr had signed a memorandum of understanding with Industrial and Commercial Bank of China for a $500 million loan aimed at increasing dollar liquidity and financing joint Egyptian-Chinese projects.