Egypt's EGX falls over growing foreign sales fueled by fears of second COVID-19 wave

The purchasing and trading operations of selected stocks, however, contributed to a reduction on the impact of foreign sales, with the index closing on a slight decline of 0.12%

  
The Egyptian Exchange bell is seen at the stock exchange in Cairo, Egypt February 6, 2018. Image used for illustrative purpose.

The Egyptian Exchange bell is seen at the stock exchange in Cairo, Egypt February 6, 2018. Image used for illustrative purpose.

REUTERS/Amr Abdallah Dalsh

The downturn in global markets has led to a wave of sales among foreign traders on the Egyptian Exchange (EGX), pushing the benchmark index EGX30 to decline significantly at the beginning of Tuesday’s session.

The purchasing and trading operations of selected stocks, however, contributed to a reduction on the impact of foreign sales, with the index closing on a slight decline of 0.12%.

So far this month, sales by foreigners have dominated most of the EGX’s trading sessions amid speculation that a worldwide second wave of the novel coronavirus (COVID-19) pandemic is likely to occur. The global pandemic has already had a significant impact on global economic indicators.

Mohamed Al-Aasar, Head of the Technical Analysis Department at Thndr Securities Brokerage, said that the market will move sideways in the range of 11,200 and 11,500 points this week, with the absence of catalysts.

Al-Aasar expects the targets of a package of stocks will be reached, the most prominent of which belong to the Commercial International Bank – Egypt (CIB) at about EGP 68.5, compared to EGP 67.7 last Thursday.

Elsewedy Electric shares are expected to rise to about EGP 8.60 compared to EGP 8 per share on Thursday, while Heliopolis Company for Housing and Development (HHD) could reach EGP 7 and Qalaa Holding will reach EGP 1.68 per share.

Mohamed Osman, Head of Technical Analysis at Pharos Holding, said that their focus is on the support level at 11,100, where the buying power will be examined. The significance of the 11,100 barrier has been attributed to its coinciding with the mid-range of Bollinger Bands on the daily chart. It also represents a previous broken peak.

Osman added that the Index should manage to keep trading above the latter support level, with the chance of its resuming its upward movement remaining high. This will mean it will retest the 11,420 -11,500 points resistance area.

“On the other hand, failure to hold above 11,100 would pave the way for further selling pressure, where the next support lies at 10,800 points,” Osman added.

He advises for short term traders to deal with each stock separately, and adhere to the stop loss levels.

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