Egypt bourse hits 5-year high on election talk

Egypt’s bourse hit a five-year high over discussions on a new presidential election law, while Dubai’s shares fell after mixed earnings reports on Wednesday. (File photo: Shutterstock)

Egypt's bourse surged to a five-year high after a local newspaper reported that discussions over a new presidential election law would begin on Wednesday, while Dubai's shares fell in profit-taking after mixed earnings reports.

Cairo's Al-Ahram said an administrative court, under the mandate of the 2014 constitution, would start discussions on the draft law. It may also give details of potential presidential candidates and the timeframe of the elections.

"People are excited about the elections, they are building positions in anticipation of presidential election law," said Mohammad Radwan, director of international sales at Pharos Securities in Cairo.

Construction- and property-related shares led the trading. Palm Hills Development Co rose 3.9 percent and Egyptian Resorts jumped 4.7 percent.

Cairo's benchmark index rose 1.9 percent to 7,721 points, its highest level since September 2008. It broke above the April 2010 intraday peak of 7,693 points but will need a weekly close above the level to confirm a breakout from the resistance.

The market was little affected by Sunday's bombing of a tourist bus in Sinai and this resilience is also supporting investor confidence, Radwan added.

In Dubai, shares in Air Arabia tumbled 4.8 percent to a two-week low after the budget carrier posted a profit of 94 million dirhams, which came in slightly below estimates. It also proposed a 7.25 percent cash dividend that's only marginally above the previous year's 7 percent dividend.

"Investors were expecting higher dividends on Air Arabia and this is a market that looks for dividends," said Ali Adou, portfolio manager at The National Investor.

Telecommunications operator Du dropped 5.6 percent, despite posting estimate-beating earnings.

Du's fourth-quarter profit fell to 570m dirhams from 994m dirhams a year earlier when the company wrote back some tax provisions.

Builder Arabtec Holding fell 2.4 percent after brokerage EFG Hermes cut the stock's rating to 'sell' citing concerns about the firm's ability to increase execution significantly after building up a large project backlog.

Emaar Properties escaped the selling pressure and rose 3.4 percent to its highest level since September 2008 after it posted a 48 percent surge in quarterly profit, handily beating estimates.

Dubai's index lost 1.1 percent, slipping off Monday's five-year high.

"The overall market has had a nice run but fundamentally, it's becoming overstretched. Fresh money won't come in if valuations are high," Adou said.

Analysts and investors have been calling for a correction on Dubai's market with heavy retail activity spurring small-cap stocks in speculative buying.

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Last Update: Wednesday, 19 February 2014 KSA 10:46 - GMT 07:46
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