Egypt Stocks Climb to 6-Week High After Interest Rate Cut

Egypt’s benchmark stocks index climbed to the highest in six weeks on speculation the second interest rate cut in as many months will help aid an economic recovery. Dubai stocks gained.

The EGX 30 Index rose 1 percent to 5,586.65 at the close in Cairo, the highest since Aug. 13. About 404 million Egyptian pounds ($59 million) of shares traded, compared with a one-year daily average of 353 million pounds. Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, climbed the most in almost a week. In the Gulf, Dubai’s benchmark rose 0.6 percent, while Qatar’s measure declined.

Shares in Cairo rose on the first trading day after the central bank reduced the benchmark overnight deposit rate by 50 basis points to 8.75 percent, the lowest level in two years. The government is trying to boost an economy stuck in the worst slump in two decades after a popular uprising in 2011.

“Reducing interest rates definitely improves the outlook for the market,” Hassan Kenawi, equities trader at Cairo-based HC Brokerage, said by phone. “It improves valuations and makes stocks more attractive for investors seeking higher returns as bond yields fall.”

The government’s benchmark $1 billion of 5.75 percent Eurobonds due in April 2020 tumbled 77 basis points last week to 7.2 percent, the lowest since May. The yield on one-year treasury bills fell to 10.54 percent, the lowest since January 2011, at an auction on Sept. 19.

Commercial International rose 1 percent, the most since Sept. 16, to 37.78 pounds. Alexandria Mineral Oils Co. jumped 3.4 percent to 73.41 pounds, the highest since January, after the company said it would pay an 8-pound dividend.

Dubai Gains

Dubai’s benchmark rose to 2,681.47 on bets the emirate’s property industry will continue to benefit from an economic recovery. Events like the Cityscape Global property fair in October, the possibility of Dubai winning the bid in November to hold the World Expo 2020 and the United Arab Emirates’ inclusion in MSCI Inc.’s emerging markets index will support share prices, according to Shuaa Capital PSC’s Hichem Djouhri.

“The rally we saw has been a re-rating to levels which make sense in terms of multiples, but we are far from being overvalued given the upcoming catalysts,” Djouhri, a Dubai-based portfolio manager at Shuaa Asset Management, wrote in an e-mail today.

Dubai’s measure climbed 65 percent this year, more than any of the 50 largest equity markets. The index trades at an average price-to-book value of 1.1 compared with multiples of 1.6 times for the MSCI Emerging Markets Index, which declined 4 percent this year.

Israel Bonds

Union Properties PJSC, the developer, surged 12 percent to 91.2 fils, the highest since November 2009. Deyaar Development PJSC, the company building residential and commercial towers in Dubai, climbed 5.7 percent to 70.1 fils.

Qatar’s Index retreated 0.9 percent, Bahrain’s All Share Index and Muscat’s gauge both lost 0.3 percent. Kuwait’s measure and Abu Dhabi’s were little changed, while Saudi Arabia’s stock market was closed for a holiday.

Israel’s TA-25 Index gained 1 percent as government bonds rose. The yield on the benchmark 4.25 percent notes due March 2023 tumbled 12 basis points to 3.84 percent. It was the first time Israel’s market opened since Sept. 17.

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