In The Daily Beam dated 19 August 2019, we came to a conclusion that the US equity market’s oft-cited phenomenon “Sell in May and Go Away” is translated to “Buy in August and Sell in February” in Egypt. Judging from the performance of the Egyptian equities so far, that interpretation clearly holds true with the EGX 30 gaining 11% in August (+23% ytd). Also, traded value totaled EGP15bn in August, the fourth-highest month so far in 2019, with the last session in the month recording more than EGP1.3bn. We can largely attribute this outstanding performance to the CBE’s decision to cut interest rates by 150bps in late August, a much-anticipated move that encouraged investors to dive deeper into the market. Foreigners turned buyers to a large measure in August from being heavy net sellers in July, but we note that a considerable part of their inflows was induced by the execution of Global Telecom Holding’s (GTHE) deal. Egyptians were mostly the sellers in GTHE’s deal, and Arabs also turned net sellers on a ytd basis. Egypt is still the third cheapest market, trading at a discount to MSCI EM and MSCI FM. Below, we analyze the market performance during August.
For more details, please read the full report below.