The market continued to trade sideways in the period from June 15 to July 15, but within a wide range,thanks to high volatility. Both the EGX 30 and the EGX 70 recovered from lows recorded at the end of June, having lost 7.6 percent and 5.8 percent, respectively.  The former recovered by 10.7 percent and the latter by 6.2 percent. Nonetheless, the EGX 30 ended the period up just 2.3 percent at 7,583.1, while the EGX 70 closed more or less flat at 359.8. Overall, declines continued to outnumber advances, but at a ratio of almost 3-to-2. Foreign institutions turned net sellers during the period, joining Arabs, while Egyptians were net buyers on both the individual and institutional fronts.

A closer look at the market's performance reveals that a few stocks generated double-digit returns despite the flat market. Memphis Pharmaceuticals (MIPH), for example, ended the period up 68 percent at LE 61.92. Pharmaceutical stocks have long been neglected, but lately some investors have been reassessing them in light of recent price hikes by the government, enabling pharmacies to pass on more of the cost of imported goods to customers. Meanwhile, General Silos (GSSC) was up 41 percent at LE 31.96. If the company's management delivers on next year's budget, the stock looks cheap. Meanwhile, Nozha International Hospital (NINH) was up 40 percent to LE 45.19 following the successful IPO of a larger hospital group, Cleopatra Hospital (CLHO).

Elsewhere, Global Telecom Holding (GTHE)--a stock that lost glamour two years ago--also advanced 28 percent to LE 3.86 on speculation that VimpelCom might be interested in taking the telecom holding company private by making an offer to buy out the firm's remaining shares. Meanwhile, stocks benefiting from the strong U.S. dollar continue to perform well. Alexandria Container Handling (ALCN) was up 20 percent at LE 482.46. Also, a stronger dollar makes Egyptian assets cheaper, hence real estate developers like SODIC (OCDI) advancing by 17 percent to LE 12.94. On the downside, one stock stood out: Beltone Financial (BTFH), which fell 28.5 percent during the period. It closed at LE 7.87, following a long uphill journey from LE 4 to LE 20. The stock is now some 60 percent off its April peak after its attempt to acquire the investment bank CI Capital fell apart.

Last month, we warned that investors should expect volatility.  Indeed, markets are roiling, but in Egypt, the situation is becoming more complex, as foreign investors remain on the sidelines, waiting for the pound to fall further before jumping back in.

© Business Monthly 2016