Hike rates

EGX flashes green after decision to hike rates and liberalize exchange rate

Fri 28 Oct 2022 | 07:20

EGX flashes green after decision to hike rates and liberalize exchange rate

The Egyptian Stock Exchange (EGX) took a strong boost after the decision to liberalize the exchange rate and the agreement with the IMF, which is similar to what happened after the Egyptian pound IPO in 2016 .

Financial market analysts pointed out that the stock market was supposed to be negatively affected by the decision to raise interest rates, but the decision to liberalize the exchange rate was more powerful than the effect of the rate increase. of interest, as this has led to the revaluation of stock prices and the influx of foreign investment.

The stock market capital of the Egyptian Stock Exchange increased by 25.4 billion EGP to reach 745.79 billion pounds, supported by the dynamic of purchase of shares by foreign investors, especially institutional ones.

The EGX30, the main index of the Egyptian Stock Exchange, rose 4.92% to the level of 11072 points at the end of today’s session, while the equal-weighted EGX70 rose 0, 72% at the level of 2241 points.

The liquidity of the Egyptian Stock Exchange during today’s session exceeded EGP 2.3 billion, with a trading volume of 701.72 million shares.

Foreign and Arab investors tended to buy on the Egyptian Stock Exchange, net of EGP 187.8 million and EGP 129.28 million, respectively.

For his part, Ayman Fouda, Head of the Capital Markets Committee of the African Economic Council, said that the Central Bank’s decision to adopt flexible exchange rate policies and the dollar rising to EGP 22.80, have positively reflected the performance of the stock market, adding this by revaluing the shares.

Foreign establishments tended to buy with a net purchase of over EGP 90 million, which increased with it. The main index rose around 4% before the end of the session, reaching 10,981 points, with intensive institutional buying on the leaders, led by CIB, which exceeded its rise by around 7%, to reach EGP 31.4, as well as Fawry, E-Finance, Sharqia Tobacco, Hermes and Telecom Egypt.

Fouda said the equal-weighted seventy index rose at the lowest pace to trade at 2251 points with investment fund activity on selective stocks in the index, which came with values high trading levels which stood at EGP 1.751 billion one hour before the close of trading, with a liquidity pattern of 68%.

He pointed out that the market is still a candidate to continue its positive performance with the decline in the value of shares and their attractiveness to foreign investments, which have already returned to buying, which has led to an increase in liquidity.

Regarding the impact of the interest rate hike decision, he pointed out that the decision does not negatively affect the rise of the dollar and notable foreign income, which will continue to have a positive impact on market exchanges. Egyptian in the short and medium term.

After the publication this morning of a set of decisions of the EPC; Including increasing the interest rate by 200 basis points, moving the exchange rate, etc. These decisions had a positive impact on the stock market in general and on most major financial stocks in particular.

He pointed out that the emergence of the purchasing power of foreign institutions after the absence and outflow of funds for almost two years, was a good start and similar to what happened after the IPO of November 2016.

Today, this emergency meeting of the Central Bank is accompanied by decisions that we see as a lifeline at the macroeconomic level, and the beginning of a more positive phase for the Egyptian Stock Exchange.