- Government efforts to ease dollar shortage boost sentiment
- Gas price cut for steel companies stokes Ezz trading volumes
Egyptian stocks rose for a sixth day, their longest rally since December, as a government decision to ease dollar restrictions and cut energy prices for businesses stoked investor confidence.
The EGX 30 Index climbed 3 percent to 6,563.65 at the close in Cairo, its highest level since Jan. 11. About 961 million Egyptian pounds ($123 million) of shares traded, more than double the one-year daily average. Ezz Steel, the country’s largest listed steel producer, jumped as much as 21 percent, its biggest advance since October 2008, before closing up 20 percent. Automobile manufacturer Ghabbour Auto gained 4.5 percent, the most in almost three months.
The gains may signal investor confidence is returning to the $54 billion market after it lost more than a third in the year through March 2. The gauge has since rebounded about 8 percent as Egypt’s central bank took steps to ease the country’s dollar shortage, on Wednesday removing caps on foreign currency withdrawals and deposits for individuals and for importers of basic goods.
“Decisions on the dollar caps and cutting gas prices to steel producers indicate that the government is moving in the right direction,” Ashraf Akhnoukh, the Cairo-based manager for Middle East and North Africa at Commercial International Brokerage Co., said in a phone interview. “It is good for the system in general.”
The government has decided to cut natural gas prices for iron and steel manufacturers by about 36 percent, the Trade & Industry Minister Tareq Qabil said yesterday. That spurred Ezz Steel, whose trading volume was more than eight times the three-month daily average.
A senior government official told Bloomberg News on Wednesday that the country plans to approach the International Monetary Fund for loan talks. Central bank Governor Tarek Amer denied the plans and said the foreign-currency crunch is temporary, according to remarks published on Thursday.
The gains left the EGX 30 above both its 50-day and 100-day moving averages. The gauge’s 14-day relative strength index was at 70, a level that some technical analysts consider to be a sell signal.