Today’s Trading Playbook
KEY THEMES
The month of March was an important milestone for EGX 30 index last year; it was when the index hit its COVID-19 bottom on 18 March 2020 based on closing prices and 19 March 2020 based on intraday performance. So far into March 2021 up to now, the index is down some 2.9%. Furthermore, considering this week, the index is on 3-week losing streak.
The below chart depicts the 31 stocks that affected the EGX30 performance during March 2021 so far, represented by the number of points each name contributed to the index movement (i.e. 334 points south so far). Out of 31 stocks (31 because of the Orascom Investment Holding [OIH] / Orascom Financial Holding [OFH] spinoff), only five had a positive influence on the index performance. It’s not difficult to explain some of the names which contributed to the index positively. On one hand, we have Sidi Kerir Petrochemicals [SKPC] which recently transferred ownership of its polypropylene project license in exchange for a 5% stake in RSNRPC, which coincided with a rally in high-density polyethylene (HDPE) prices. Also, SODIC [OCDI] rise was justified by its potential acquisition by Aldar Properties [ADX: ALDAR]. Interestingly, and unfortunately, the heaviest laggards were mostly defensives financials. Also, two of Egypt’s three components of MSCI EM index were among the top 10 laggards. This really keeps the question open as to what extent the drift in EGX large caps is supposed to last until it is finally appealing enough.
POSITIVE
HRHO: EFG Hermes Holding [HRHO] just reported its 2020 results this morning, which came in better than our expectations on both revenues and earnings levels by 9-11%.
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