Fears of consequences of coronavirus quickly re-dominated the minds of investors, erasing the gains of the stimulus package that the government launched to support the Egyptian Exchange (EGX).
Pessimism regained control once again on the expectations of traders, especially with the unclear vision about the outlook of the Egyptian economy with the start of curfew and fear of acceleration of coronavirus spread in Egypt. The virus impact on production, companies, and economy, in general, would be grave.
The stimulus included President Abdel Fattah Al-Sisis statements to pump EGP 20bn by the Central Bank of Egypt (CBE), which followed reduced stamp tax, gas, and electricity prices for factories.
The Financial Regulatory Authority (FRA) abolished the temporary suspension for the EGX100 in cases of gains in line with global markets and kept the mechanism in place for losses only. Contrary to what was expected from this decision, the EGX30 fell 2.76% to 9770 points, due to pressure from foreign and Arab investors, amid trading volumes declining again to EGP 761.9m after having exceeded EGP 1bn before.
Mohammed Al-Aassar, Director of technical analysis at Namaa Securities, believes that the index will continue to decline towards 9,500 points, driven by expected sales pressures as the emergency procedures in the country continues and the escalating fears of coronavirus outbreak.
For his part, Mohamed Kamal, director of trading at Rowad Securities, believes that the presence of large margin call operations in the market will continue selling pressure on the shares, and then the EGX decline scenario remains the closest, especially with the application of the curfew and the continuing concerns about the inflation implications of the coronavirus on the Egyptian economy.
2020 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info).
