Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
Exactly four weeks to call 2020 a year, probably one of the most eventful, yet infamous, years the world has ever come to know in recent history. In Egypt, an earthquake with a magnitude of 5.4 on the Richter scale hit Cairo and other coastal cities yesterday afternoon for a few moments. On the positive side, Egypt’s PMI November 2020 reading published Thursday was still above the 50 threshold, which is promising given the circumstances worldwide. Egypt’s balance of payments (BoP) in FY20 has reflected somewhat the impact of COVID-19 on the economy, mainly in Q4 FY20. Our senior economist Mona Bedeir runs us through the key takeaways from the BoP in this note.
Meanwhile, as we expected last Thursday, we called for contrarian investors to bet on Juhayna Food Industries [JUFO] which had seen its stock fall on Wednesday following news concerning its chairman (please see the update below in the news section). The stock managed to end Thursday on an upbeat note, paring some of its earlier losses, up 2% on the day. Similarly, our Thursday call on Oriental Weavers Carpet [ORWE] also paid off, with the stock ending the day up 3.5%. Incidentally, ORWE is an exemplary case on how being listed on the EGX has transformed family-owned companies into strong institutions, especially when corporate governance is upheld. This was basically our call on JUFO.
POSITIVE
EGCH: Egyptian Chemical Industries’ (KIMA) [EGCH] call to increase its capital by 44% in cash (please read the news below) could be a short-term positive for the stock, as the company looks to alleviate its EGP6.7bn debt load.