Egyptian shares are mixed on Monday, with the main index lying just short of its highest in more than a year after the country's brightening economic outlook triggered several weeks of rising share prices. The index is little changed from Sunday's close after touching 5,473.07 points earlier in the session. In March it reached 5,473.30, its highest since June 2011.
The index has surged 36 percent since late June when Islamist Mohammed Morsi emerged as winner of the country's first free leadership contest after more than a year of political turmoil. The rally accelerated when the new president stamped his authority on the state by retiring the country's two top generals and cancelling army vetoes over legislation and a new constitution.
The move made for more clarity over policy and could make it easier to secure a $4.8 billion loan from the International Monetary Fund, which Egypt requested formally last month. Hopes for more foreign donor aid and merger and acquisition activity have also propelled the rally. "There is still phenomenal potential for the market because we had some great structural changes in the past month," says a Cairo equity trader.
"Whether you are talking in terms of investment or political strategy, you now have one dominant force represented by Mursi that is capable of implementing policy and making tough decisions," the trader says. Among the main gainers are banks, a day after France's Societe Generale said it was in talks to sell its Egyptian unit National Societe Generale Bank (NSGB) to Qatar National Bank.
NSGB jumps 10 percent for a second straight session. EFG Hermes, which has already agreed a Qatari tie-up for its main investment banking unit, sees the heaviest trading on the Egyptian Exchange, gaining 1.5 percent. Commercial International Bank climbs 0.9 percent. Gulf bourses trade flat to lower mid-session as investors wait for catalysts to build positions, while booking profits on recent gains.
Dubai's index slips 0.3 percent to 1,540 points, heading for a sixth-session decline in last seven. The market hit a 16-week peak on August 23, but remains up 13.9 percent year-to-date. Heavyweight Emirates NBD is the main drag as the lender loses 2 percent. Telecom operator Du falls 1.2 percent and logistics operator Aramex slips 1.1 percent.
"Dubai is the best performing market in the Gulf. It's toning back down a bit which puts it in a good position," says Marwan Shurrab, vice-president and chief trader at Gulfmena Investments. "The problem in the UAE is liquidity, which needs to be tackled. It's not encouraging new money to enter the market."
In Kuwait, the measure slips 0.1 percent to 5,889 points, edging away from Sunday's 10-week high. Elsewhere, Qatar, Saudi Arabia and Abu Dhabi's bourses trade flat. Gulf markets are seen trading lower amid a lack of catalysts and thin news flow, while a long weekend in the United States is likely to keep some investors on the sidelines as they wait for market direction.
Asian shares edge up on Monday after US Federal Reserve Chairman Ben Bernanke kept the door open for further stimulus if needed, while weak economic indicators across the region raised hopes for additional growth-bolstering steps in Asia as well. "There's a long weekend in US and there isn't any regional catalyst," says Amer Khan, fund manager at Shuaa Asset Management. "Our markets will look to direction from ECB."
Khan says investors are likely to sell some stocks that have rallied in recent weeks and trade sideways to lower until third-quarter earnings are announced. US markets are closed on Monday for the Labour Day holiday. Qatar National Bank, the state lender seeking to boost its regional presence through acquisitions, has hired J.P. Morgan Chase to advise on its planned buy of Societe Generale's Egyptian arm, three sources said.
Most Gulf markets finished lower in the previous session after the United States put off further monetary easing. Elsewhere, shareholders in Kuwait's Global Investment House approved a plan for the company's $1.7 billion debt restructuring that will create new special purpose vehicles to take on its debts. In other news, Kuwait telecoms operator Zain has changed its management structure, creating the positions of deputy chief executive and chief operating officer.