Egypt’s EGX 30 Falls Most in Five Months; CIB and AMOC Pressure

CAIRO (Capital Markets in Africa) – Egypt’s main stock benchmark falls 2.6% to 13,546.24 as of 2:09pm in Cairo, the most since April 23 and the lowest level in a month. Index is pressured by  Commercial International Bank Egypt (CIB) and Alexandria Mineral Oils (AMOC).

• Commercial International Bank Egypt down 2.3% to 76.17 Egyptian pounds
  • Biggest contributor to index decline; down to the lowest level since May
  • NOTE: Bank is the biggest singular weight to the EGX 30 (35.2%)
  • Overal, Egyptian market is being hit by panic in CIB, says Sherif Shebl, equities trader at Pharos Holding for Financial Investments in Cairo
    • Retail investors, which mostly trade by leverage, are selling the name, “so brokerage companies might be forcing them to reduce exposure”
    • “Breaking the 80 level was a clear signal to exit CIB“
• Alexandria Mineral Oils falls 7.6% to 12.70 pounds, as it trades without the right to dividend
  • Worst performance within 30 members of Cairo’s main gauge
  • Trims gains this year to 70%
    • Up 18% since co. announced on Aug. 20 it would propose to distribute 50% share dividend, raising capital from 861m pounds to 1.29b pounds and that it studied investing 500m in fuel oil refining project
• “The whole Egyptian stock market is currently witnessing a correction wave since many stocks were overvalued, including AMOC’s,“ saysMohamed Magdi, an equities analyst at Prime Securities
  • Tensions in Iraq are not seen impacting the co. as its feedstock suppliers are in Egypt and mainly depend on local sources
    • Suppliers not included in Al Basra agreement between Egypt and Iraq
    • READ: Iraq Seizes Oil Fields as Fighting Flares Over Kurds’ State Push
  • “On the other hand, the agreement states that AMOC will be allocated c.210,000 barrels of crude oil per month to be refined by the company in a third party facility, namely Midor”
    • “In case Iraq stalled its monthly oil shipments of 2mn crude oil barrels each 2 months (as per Al Basra agreement) to Egypt, around 11% of AMOC’s EBITDA will be slashed, in my FY2017/18 expectations.”
  • NOTE, on Aug. 30: Co. said it is studying in preliminary stages an investment of $500m in a fuel oil refining project