Today’s Trading Playbook
KEY THEMES
Yesterday, less than 24 hours before e-finance [EFIH]—Egypt’s largest IPO in years—hits the market, trading on the EGX was halted after EGX 100 fell 5%, led down by EGX 70 EWI’s constituents. On the other hand, EGX 30 only inched down 0.7%. EGX 70 EWI was pulled lower by the negative performance of many of its constituents that fell by around 20% apiece. While there is no clear reason behind such a fall, it does seem like a “flight to quality” trading behavior after many investors sold off the once-high-flying small-cap stocks in fear of potential margin calls. Indeed, the price rally we have all seen in EGX 70 EWI post-COVID-19 to date was fueled to an extent by margin loans, a double-edged sword. Fortunately, large caps have been lagging for more than a year, leaving many household stocks with room to head north, simply on a valuation basis. With EFIH’s trading commencing today, we believe attention will be paid to large caps in general and EFIH in specific. Within our core coverage, names that we like in the large cap space include Abu Qir Fertilizers [ABUK], B Investments [BINV], CIB [COMI], EFG Hermes Holding [HRHO], Elsewedy Electric [SWDY], and Orascom Construction [ORAS].
Now, on to the top news and analysis for the day.