Today’s Trading Playbook
Amr Hussein Elalfy CFA | Head of Research
KEY THEMES
Institutional investors (Egyptian and foreign) ended yesterday’s trading session all as net buyers, not our usual trading mix for long. Could this be the start of a trend? We have long been advocates of “the big shift”, where large caps come back to the market’s front seat. We believe the year 2021 is set to witness such “big shift”. EGX 30 is already up 5% ytd, ahead of EGX 70 EWI’s 3.9% ytd. We all know that when CIB [COMI] (+6.7% ytd) moves, so does EGX 30. But what is interesting so far in the first eight trading sessions of 2021 is that the EGX 30 performance has also been driven by other stocks, such as EFG Hermes Holding [HRHO] (+6.4% ytd), Juhayna Food Industries [JUFO] (+15.4% ytd), Sidi Kerir Petrochemicals [SKPC] (+17.6% ytd), TMG Holding [TMGH] (+5.3% ytd), and Elsewedy Electric [SWDY] (+5.2% ytd). If it wasn’t for the CBE’s decision to hold off banks’ dividend distribution, EGX 30 performance would have been higher.
Positive
Natural gas-linked stocks: If the Egyptian government’s proposal to cut natural gas prices from USD4.5/mmbtu to USD3.5/mmbtu is ratified (please see the news section), we could see a continuation of the rally we have seen over the past few weeks. Focus would be on the sectors and stocks linked to natural gas prices, such as steel, chemicals, and ceramics.