Mohamed Khedr CPM, CFTe, MFTA
Head of Technical Analysis Department
T: 20233005721
Traders are buzzing about two important news items.
The first news is about Electra Investments Holding offers to buy 24.5% stake in Elsewedy Electric [SWDY]. According to Sky News Arabia, SWDY is the largest listed cable manufacturing. Co in the Arab world. It is also a significant constituent of the EGX 30 index [EGX 30]. We think that traders are interested in this deal because it offers the potential for capitalizing on the market price difference between the stock market price and the deal price. Additionally, the deal allows for the acquisition of US dollar.
The second news is about the IPO of Act Financial [ACTF]. From July 9th to July 18th, 2024, public subscription requests will be accepted. This IPO has garnered attention from market participants due to the company's impressive track record prior to the offering, particularly during the years 2020-2021. During that period, ACTF acquired minority stakes in Heliopolis Housing & Development [HELI], achieving a return of 158%, according to the company's disclosure model, after divestment.
This high return of 158% in a medium-term, specifically in HELI, has prompted some market participants, especially those who do not rely on technical or financial analysis in their investment decisions (the crowd), to try to know Act current strategy and its outlook for the Egyptian market. Crowd aim to activate the same strategy (buying or selling) in order to achieve a similar return.
As a result of this impressive track record over year and the tendency of some crowd to act as Act, we believe that Act has become an influencer on market participants' behavior (supply and demand in the stock market).
In this report, we will explain our technical reasons that led us to advise short-term traders to subscribe to Act's IPO. However, the lack of historical data that would allow us to analyze it technically at this point, especially regarding potential targets.
Read the full report below.
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