DUBAI: Egypt’s index eased from a 69-month high as investors awaited next week’s presidential election before committing more cash to the market.
Property developer Talaat Mostafa and telecom operator Global Telecom Holding were among the main drags, falling 1.1 and 2.8 percent respectively.
The benchmark slid 0.3 percent to 8,532 points. On Thursday, it ended at 8,553 points, its highest close since August 2008.
“We need a catalyst to pass through 8,600 points. We might see a slight correction,” said Mohamed Radwan, head of equities at Pharos Securities in Cairo.
Egypt’s market will trade sideways until after the presidential election on May 26-27, Radwan said.
The vote, which former army chief Abdel Fattah El-Sissi is expected to win easily, could then trigger a rally should there be a high turnout and the process “goes smoothly,” Radwan said.
Arabian Cement Company rose 15.4 percent on its bourse debut. The firm’s initial public offering was Egypt’s first major flotation since the 2011 political uprising.
“The success of this IPO should pave the way for others to come to the market,” said Radwan.
Elsewhere, Dubai’s index fell for a third session, dropping 0.9 percent, while Abu Dhabi slid 0.7 percent.
This pair are up 52 and 16 percent respectively this year, but a sustained rally has showed signs of faltering in recent weeks, with Dubai 4.4 percent below May 6’s six-year peak and Abu Dhabi 4.3 percent shy of April 23’s eight-year high.
Some valuations have become stretched, analysts said, but heavyweight stocks including Emaar Properties and Aldar Properties posted big jumps in first-quarter profit to bolster market sentiment.
“That usually means fund managers and analysts will review their forecasts for the rest of the year and, from that, attract more liquidity,” said Mohammed Yasin, managing director of NBAD Securities. “But with such a large move we have to be selective. You can’t keep buying across the board.”
Late Wednesday, index compiler MSCI announced which UAE stocks, as well those in Qatar, would be added to its emerging market index, with June 1 the first day’s trading where these changes will be in effect.
The likes of Emaar and Abu Dhabi Commercial Bank were considered certainties to be included, but many investors also made failed bets on smaller companies such as Union Properties and Deyaar making the cut.
This pair fell for a second session and are now down 4.2 and 7.9 percent respectively since MSCI’s Wednesday announcement.
“We’re seeing a separation between the long-term value investors and the smaller day-trade investors who have been playing with these shares,” said Yasin.
In other countries, the initial few sessions following an MSCI upgrade were usually negative, he said.
“Local investor build up positions prior to the inclusion in the hope of being able to sell to foreign investors coming in, but these funds don’t enter in the first few sessions,” said Yasin. “They may test the market with a little volume.”
Egypt stocks ease from 69-month high
