The benchmark EGX30 gained 4.1% in July, closing the month at 34.2k points after having notched a record high of 34.7k earlier in the month, according to bourse data (pdf). This puts the benchmark index ahead of the EGX33 Shariah index, which rose 1.7% last month, and behind the more volatile SME Tamayuz index, which jumped 22.4%. Total market cap rose 3.3% to EGP 1.4 tn.

The EGX30 is up 15.2% for the year to-date as of yesterday’s close.

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Investors came out to play last month: Total value traded was up 20% m-o-m to EGP 1.7 tn in July, while volumes jumped 34% to 35.5 bn securities.

Local institutional investors were net buyers in listed stocks with a net purchase value of EGP 1.6 bn (excluding block trades), while regional and foreign institutional investors were net sellers. Local and foreign retail investors were net buyers, and regional retail investors were net sellers with net sales worth EGP 224 mn (excluding block trades).

Non-bank financial services shares were the most-traded equities by value in July (excluding block trades), logging EGP 20 bn in turnover. Real estate followed with EGP 17 bn, despite the sectoral index losing 2.5%. IT, media & communication services ranked third at EGP 8.6 bn.

Building materials shares grew the fastest in July, rising 15%. Other gainers included:

  • Contracting and construction engineering: +9%
  • Food, beverage, and tobacco: +6%

Shipping and transportation stocks brought up the rear, collectively closing down 6.7%.

IN CONTEXT- The rally in July was fueled by high liquidity, exchange rate stability, and expectations of further interest rate cuts later this year, Alpha Financial’s Managing Director Mohamed Hassan told EnterpriseAM. While the central bank left rates unchanged in its last meeting, markets are pricing in a potential 400 bps reduction as inflation continues to ease which has supported sentiment across equities, he said.

Private ins. funds have been a key liquidity driver in recent months, Hassan told us. Under new regulations from the Financial Regulatory Authority, ins. companies are required to invest at least 5% oftheir assets in equities this year, channeling an estimated EGP 20 bn into the EGX between June and next month, he said. This influx is expected to continue supporting trading volumes in the near term.

Ultimately, equities stand to gain the most: Amer Abdelkader, the head of Pioneer Securities’ brokerage division, added that local institutions have anchored the market over the past three years, offsetting foreign and regional selling. While debt instruments have attracted foreign flows, he expects equities to ultimately benefit the most, with industrial and housing-related stocks likely to outperform in the months ahead, despite possible short-term slowdowns.

On the index outlook, Hassan noted that the 34k-point level remains a critical resistance, with the market likely to trade sideways temporarily to consolidate liquidity. “Once fresh inflows materialize and new investors enter, the EGX30 could break through 34.5k and target 36k,” he said.

How the EGX fared against regional and global benchmarks:

  • DFM: +7.9%
  • ADX: +4.1%
  • Tadawul: -2.2% (one of its worst months this year)
  • S&P 500: +2.2%
  • FTSE: +4.2%
  • Euro Stoxx: +0.3%

EFG Hermes’ brokerage arms led the EGX brokerage league table (pdf)in July with a combined 13.4% market share, followed by Thndr (8.7%), Mubasher (8.1%), and CI Capital (8.0%).

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