Today’s Trading Playbook
KEY THEMES
It’s official! EGX 70 EWI is now down on a year-to-date basis, having succumbed to pressure and fallen some 2.7% yesterday. Meanwhile, EGX 30, although was down 0.6% yesterday, is still up for the year (+3.5%). EGX 70 EWI performance was dragged by small-cap names that have been on a roll over the past year or so, while EGX 30 performance was held up by CIB [COMI]. We continue to prefer large caps over small caps for several reasons: (1) Large caps have underperformed small caps by a huge margin in 2020, (2) Small caps have been bid higher by retail investors, mostly using leverage, making the small-cap rally susceptible to any short-term downturn, and (3) large caps are at 3-year historical lows in terms of valuation, excluding the COVID-19 blip (i.e. P/E multiples), trading at 9x 2021e earnings vs. MSCI EM’s 15.8x.
For a complete list of our EGX top picks, please refer to our STANDPoint report.
Now, on to the top news and analysis for the day.