Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
The market was very active yesterday with many investors coming back to the market from the holidays for the New Year and Christmas seasons. The main market’s EGX 30 seems to be on track to recover some of its lost ground as we expect it to do so in 2021, jumping 2.4% on the day and outperforming its EGX 70 EWI counterpart which added only 1.3%. EGX 30’s performance came so far into the New Year (+3.4%) came in line with MSCI EM which is up 4.8% already on a year-to-date basis. We see a couple of reasons driving Egypt’s market performance so far: (1) global markets are generally up on hopes of the distribution of the COVID-19 vaccines as well as a peaceful transition of power in the United States, (2) foreign investors ended yesterday net buyers which was reflected positively on CIB [COMI] (+3.5% d/d)—the EGX 30 main component, (3) higher oil prices (+6.7% ytd) in anticipation of an improved global outlook which filtered through to some of the names whose end products are linked to oil, such as Sidi Kerir Petrochemicals [SKPC] (+6.6% d/d), AMOC [AMOC] (+5.5% d/d), and Qalaa Holdings [CCAP] (+3.4% d/d), and (4) the CBE probably opting to resume its easing cycle early 2021 (in February and March meetings) given subsided inflationary pressures and a stable Egyptian pound. Indeed, December inflation figures released yesterday showed a deceleration in food inflation, leading annual headline inflation to ease for the first time in three months. Annual urban headline fell to 5.4% in December, down from 5.7% in November, ending 2020 at average inflation of 5.1%. For more details, please read our macro inflation note published on 10 January 2020.
POSITIVE
SKPC: After abandoning capex related to its polypropylene project in 2021.