KEY THEMES
Yesterday, the market sold off around midday with many stocks feeling the brunt. As usual whenever the market goes down, market participants go their way trying to explain or at least rationalize what went wrong for the market to go down. However, they often seem to forget that what goes up must come down at some point in the future. But human nature needs an explanation to put the nervousness to rest! Well, we might have one explanation that has to do with the overall market—no guarantees though that this is the only explanation. With the COVID-19 pandemic casting its shadows once again around many countries around the globe, investors may have become more worried that Egypt could be up for a second wave of the pandemic. With the Egyptian Prime Minister voicing his concerns in yesterday’s weekly Cabinet meeting, investors may have had a déjàvu of the market sell-off back in mid-March when the pandemic first struck. That said, we think we are not close to where we were back in March. For one, by now the people have more health awareness of what it takes to deal with the pandemic. However, what may have triggered the market nervousness is concerns over any economy lockdowns over the coming months if the number of new COVID-19 cases continues to rise. For this, we advise our clients to stick to names that are not as prone to the pandemic, some of which we list below.
POSITIVE
- Banks: CIB [COMI], Export Development Bank of Egypt [EXPA].
- Consumer Discretionary: Cairo for Investment & Real Estate Development [CIRA], MM Group [MTIE].
- Consumer Staples: Eastern Co. [EAST], Obour Land Food Industries [OLFI], Juhayna Food Industries [JUFO].
- Health Care: Ibnsina Pharma [ISPH], small pharma stocks.
- Materials: Misr Chemical Industries [MICH].
- NBFI: EFG Hermes Holding [HRHO].
- Telecom: Telecom Egypt [ETEL].
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