Market Report: Foreign optimism fuels Monday trading

Stepped-up activity by foreign investors caused Egypt's stock market to rebound on Monday following substantial losses the day before on the back of global market turbulence.

The EGX30, Egypt's benchmark stock index, climbed 1.67 per cent to close out the day at 4,304 points. The broader EGX70, meanwhile, rose by 0.72 per cent.

"The relative improvement in international markets has encouraged foreign investors to increase their activity in Egypt," capital markets expert Mostafa Badra told Ahram Online.

European markets ticked higher on Monday as the euro bounced back from a ten-year low against the Japanese yen amid speculation that the European Central Bank might cut interest rates in an effort to ease concern over the ongoing euro zone debt crisis.

US Stocks, meanwhile, also opened in the green on the back of hopes that measures recently adopted by European policymakers would help ease the region's debt problems.

In Egypt, foreign investors accounted for more than 31 per cent of the day's total volume, with net buying standing at LE13.8 million. Local investors represented 60 per cent of total trade, net selling along with their Arab counterparts.

Total trade volume, however, stood at a meagre LE269 million for the day, which Badra attributed to a reluctance on the part of institutions to inject sufficient funds into the market.

"Given the rising yields of treasury bills, why would financial institutions invest in the highly volatile stock market?" he asked.

Treasury yields have surged within the last six months to reach levels last seen in 2008, as banks continue to demand higher returns.