Today’s Trading Playbook
KEY THEMES
Global markets ended last week on a bullish note thanks to easing concerns with regard to the latest COVID-19 variant (i.e. Omicron). U.S. equities regained momentum, following the notable losses seen by the end of last month, as CPI data came favorable to investor’s sentiment. On the other hand, Brent oil price concluded its best weekly performance since August, supported by Saudi Arabia hiking cured prices, as well as receding jitter that Omicron will once again dampen global demand for energy.
Here at home, divergence between the EGX30 and EGX70 EWI continued, with the former gaining 0.73%, whereas the latter has slipped 0.28%. From ytd perspective, the EGX70 EWI has officially wiped out all of its gains this year, losing 1.4% ytd. We note that, the EGX70 EWI used to be up nearly 43% ytd just this September! On the other hand the EGX30 is up 6.36% ytd, nearly two weeks before saying goodbye to 2021.
Elsewhere, the execution of the SPO related to Abu Qir Fertilizers [ABUK] through the sale of 10% of ABUK shares has sent the share flying. Despite the sale occurring at a steep discount to our 12M PT of EGP31/share, the stock rallied deservingly, as the market began to realize how low ABUK’s price is relative to its sound fundamentals. We believe that the success ABUK’s SPO had will pave the way for a long list of awaited governmental SPOs, and not to mention a long pipeline of IPOs, as liquidity slowly improves.
Moreover, going into 2022, we would like to reiterate that we put the M&A theme front and center. We believe so in light of the absurdly low valuations in several sectors, rendering replacement costs for many of the EGX listed roster much higher than their current market capitalization.
Now, on to the top news and analysis for the day.