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EGX sees record trading despite 25% bank certificates IMF agreement, floating Egyptian pound, and tightening monetary policy are steps to address crisis: El Dokani
Following the depreciation of the Egyptian pound against foreign currencies on Wednesday, the Egyptian Exchange recorded a 3.25% rise in trading, although state-run banks issued saving certificates with high interest of 25%. The performance of the EGX indices varied in yesterday's session, as EGX30 rose 3.25% to record 15,557 points, while EGX70 EWI declined 0.67% to 2,911 points.
The exchange rate of the US dollar against the Egyptian pound approached EGP 27, which pushed the exporting companies' stocks. The most prominent rising stocks were Abu Qir, Alexandria Mineral Oils, Alexandria Container Handling, Sidi Kerir, and Ezz Steel.
The largest increase in the sectors as a whole was the banking sector, which witnessed an increase of 14.06%, and the Commercial International Bank (CIB) increased by 3.8%, and the Housing and Development Bank (HDB) by 2.09%, in addition to other listed banks.
The rise was also attributed to the non-banking financial services sector by 13.68%, which was the second largest growing sector, and the communications and information technology sector, textiles and durable goods.
Hany Genena, an economist and professor of economics at the American University in Cairo, said that interest rates and the issuance of certificates with a return of 25% or more aim to reduce speculation on the dollar.
He pointed out that monetary policy is centered on two points, the exchange rate and the interest rate, as the liberalization of the exchange rate aims to facilitate monetary policy and encourage domestic investment, not only export, as a result of moving the exchange rate.
He added that the year 2023 will see two factors driving stocks in EGX, the first is the investors' trend towards stocks as a hedge against inflation, and the second is a booming trend, and the Egyptian Stock Exchange is likely to be the best performing stock exchange.
The broader EGX100 EWI rose by 0.31% to 4,339 points, and EGX30 capped rose 3.08% to 18,862 points.
The market recorded its highest trading value at EGP 3.5bn, and the session witnessed circulation of 1.4 billion shares, with the highest number of transactions at 115,600 operations on the shares of 204 companies, of which 63 shares rose, and the prices of 92 other shares declined, while the prices of 49 other shares did not change. The market capitalization reached EGP 1.01trn, the highest since 2018.
Egyptians and Arabs tended to buy, recording EGP 35.4m and EGP 24.8m, respectively, with acquisition rates of 85.6% and 6.6%, respectively, while net foreign transactions tended towards selling, recording EGP 60.1m, with an acquisition rate of 7.8%.
Rami El Dokani, Chairperson of EGX, said that the global political conditions were reflected in all global stock exchanges, and emerging markets in particular, particularly the Egyptian Stock Exchange.
During his speech at the stock exchange's annual press conference, El Dokani explained that the government's agreement with the International Monetary Fund, the floating of the pound, and the tightening monetary policy were among the government's steps to address the crisis that had spread to Egypt, pointing to an increase in the percentage of Arab and foreign trading together by 10% over the past year.
He added that the growth rates of the Egyptian economy continued to grow, but the large inflation rate swallowed up a large part of the efforts made by the Egyptian state.
Institutions carried out 25.8% of the transactions, heading towards buying, with the exception of foreign institutions, who recorded a net sale of EGP 62.1m, while local and Arab institutions recorded a net purchase of EGP 255.5m and EGP 28.5m, respectively.
Individuals seized 74.2% of the transactions, heading towards selling, with the exception of foreigners, who recorded a net purchase of EGP 1.9m, while the Egyptians recorded a net sale of EGP 220.2m, while the Arabs recorded a net sale of EGP 3.7m.
