Egypt's benchmark index climbed more than 3 percent on Sunday, buoyed by a central bank decision to cut interest rates, brokers said. Selling pressure to prepare for the Telecom Egypt IPO also eased, helping the market to climb overall, brokers added. The IPO closes on Wednesday.
"Everybody was cashing out to go into the IPO, then the excess cash came back to the market. It was a temporary thing," said Mohamed Kotb, head of trading at Prime Asset Management.
He also said the decision announced on Friday by the central bank to cut its overnight deposit and lending rate by 1/4 of a percentage point had also boost the market. The decision was taken at a meeting of the monetary policy committee on Thursday.
"(The central bank is) lowering interest rates and this should help the equity market very much," Kotb said.
The benchmark Hermes index closed up 1,537.38 points, or 3.1 percent, at 50,660.05 points. The broader CIBC index rose 3.15 points, or 1.5 percent, to finish at 208.05 points.
The top performers were textile shares, which dealers said rose because investors expect the sector to do well under the Qualified Industrial Zone (QIZ) deal that will particularly help textile firms' export to the United States.
Arab Polavara surged 14.5 percent to last trade at 11.93 Egyptian pounds ($2.07) and Arabia Cotton Ginning climbed 10.5 percent to last trade at 17.93 pounds.
Oriental Weavers, a carpet and rug maker, also surged, 8.2 percent to last trade at 98.10 pounds. Dealers said sentiment in the stock has been buoyed by the firm's restructuring plans.
The Central Bank of Egypt said on Friday it had cut its overnight rates by 1/4 percentage point to 8.75 percent for deposits and 10.75 for lending, in response to a fall in inflation.
The statement followed a monthly meeting of the monetary policy committee on Thursday.
The previous rates were 9 percent for overnight deposits with the central bank and 11 percent for its lending to banks.
Four of nine banks contacted by Reuters had dealt in overnight money on Sunday, citing rates of 8.8 to 8.95 percent, compared to a range of 9.05 to 9.15 percent on Thursday.
"The drop in the (interbank) rates was mainly due to the (central bank) corridor coming down," said one of the bankers, who asked not to be named.
Bankers said the market was quiet overall because most banks had squared their positions earlier in the current two-week period for calculating central bank reserve requirements. The period ends on Monday and new period starts on Tuesday.
Only one bank had dealt one-week money, at 8.95 percent. Only one bank also said it had dealt for one week on Thursday at 9.25 percent.
The pound had strengthened slightly by 1100 GMT to 5.7571 pounds to the dollar, from Thursday's closing weighted average of 5.7579.