Egypt's benchmark stock index surged 5 percent on Sunday on strong foreign interest, possibly driven by the Egyptian government's presentation to the World Economic Forum in the Swiss resort of Davos last week. Investment bank EFG-Hermes helped the rally by doubling its target value for market heavyweight Orascom Telecom (OT) to 450 pounds ($77.19) a share and raising by 39 percent its estimate for Egyptian International Pharmaceuticals Company (EIPICO), brokers said.
But the price surge to record levels was much broader and appeared to be driven by sentiment about the Egyptian economy and the government's commitment to reform, the brokers said.
The benchmark Hermes index was last quoted 4.9 percent higher at 31,054.67 points - a new record closing high. The index has risen 30 percent since the New Year and 100 percent since the government took office in July.
The broader CIBC index, which includes small-cap stocks, climbed 2.5 percent to 124.46 points.
Brokers said the relentless rally was astounding and could set the market up for a sharp correction.
"No one knows where this is going. Is it sustainable? I can't see it continuing. It's too high," said Yasser Hassanein of Dynamic Securities.
But Bassim Arida of CIBC Brokerage said that if company results for 2004 are as good as some expect, the shares would not be expensive for the region, even at current levels.
He said interest in the Egyptian market remained strong from the West, the Gulf and domestic investors and this would increase if there is more privatisation and take-over activity.
Orascom Telecom was the highest percentage gainer of the day, adding 11 percent to last trade at 367.00 pounds.
An EFG-Hermes official said the bank had raised the target price to 450 pounds from 228, based on subscriber growth in OT subsidiaries. OT has mobile phone interests in North Africa, Egypt, Iraq, Pakistan, Bangladesh and sub-Saharan Africa.
A separate EFG-Hermes report said it was raising its fair value estimate for EIPICO to 16.60 pounds on expectations that net attributable profit will grow 14 percent to 133 million pounds in 2005. The shares closed 7 percent up at 13.96.
Other telecom and textile shares also rose strongly.