KEY THEMES
Oil prices continued to trend upward in early Tuesday trading on the back of concerns over potential supply disruptions. Such concerns were reinforced after Yemen's Houthi group attacked the United Arab Emirates through a drone attack. The build-up of geopolitical tensions has driven Brent oil prices to its best levels since October 2014, trading above the USD87/bbl.
Here at home, after almost three weeks of action in 2022, both of the EGX30 and EGX70 EWI are mildly down, with the ytd performance for both indices at 0.75%, and 0.28% respectively. Despite us being down so far in January, we note that January was historically a good month for the EGX30. Since 2005, the index monthly close in January came 65% (11 times) in the positive territory, whereas 35% (6 times) its monthly close came in red. Moreover, the index average monthly return in January during such period is 4.7%. In 65% of the time, when the index scores a positive monthly close, the average monthly return is 13%. However, in the remaining 35% of the time, when the index scores a positive monthly close, the average monthly return is -10%. As we stand, the EGX30 is now trading at 2022e P/E of c.7x, which implies an earnings yield of c.15%.