March 25 (Bloomberg) -- Egyptian stocks rose to the highest level in more than five years as investors speculated property developers would benefit from an army agreement with Arabtec Holding Co. to build low-income housing.
The benchmark EGX 30 Index snapped two days of losses, gaining 1.1 percent to 8,501.63 at the close in Cairo, the most since August 2008. About 1.1 billion Egyptian pounds ($152 million) of stocks traded, compared with one-year full-day average of 480 million pounds. Ten out of the gauge’s 11 real estate stocks rose, led by a 6.9 percent spike for Medinet Nasr Housing.
Property stocks have outperformed the EGX 30 since the military signed a memorandum of understanding with Arabtec on March 9 to build 1 million apartments for low-income individuals. The benchmark index has gained 25 percent this year, the most in the world after the Dubai Financial Market General Index, among 94 equity gauges tracked by Bloomberg, as the army seized power following the ouster of President Mohamed Mursi in July of last year.
“The military’s deal with Arabtec is definitely driving the entire market, but especially the real estate sector,” Tamer Ismail, head of dealing at Cairo Capital Securities, said by phone. “The thinking is the deal will drive up building material prices and thereby strengthen property prices. We’re already seeing signs of this.”
Medinet Nasr Housing climbed to 33.8 pounds, the highest level in almost six years. Palm Hills Developments SAE advanced 2.2 percent to 4.22 pounds, a three-year high. The shares advanced 33 percent and 24 percent, respectively, since the Arabtec deal. That compares with a 7.1 percent increase for the EGX 30.
To contact the reporter on this story: Ahmed A. Namatalla in Cairo at email@example.com
To contact the editors responsible for this story: Samuel Potter at firstname.lastname@example.org Matthew Brown