Achieved The Egyptian Stock ExchangeHuge losses since the beginning of this month of April, as the market capital lost 73 billion pounds within 15 days, and the main index lost 425 points to close at the level of 10143 points, and the index of small and medium-sized companies fell 149 points, and experts attributed the reasons for this decline to external factors, most notably the lack of The stability of the political situation in the region, and internal factors, most notably the margin buying and the bubble of small and medium-sized companies.
Dr. Mutassim Al-Shahidi, a financial market expert, said that the Egyptian capital market suffers from weakness in general, which affected the performance of indicators, which are moving in a downward direction in the short and medium term. Therefore, dealers are advised during the current period to combine financial and technical analysis in choosing stocks by moving away. For stocks whose market value exceeds the fair value estimate, buying shares whose market value is much less than fair value, choosing the best time to buy them through technical analysis, while following the policy that any rise is an opportunity to sell and any decline does not mean an opportunity to buy.
He returned the “martyr”, reasons for loss The Egyptian Stock Exchange Since the beginning of this month of April due to internal factors, namely; First, the bubble in some small and medium-sized companies’ shares, which reached price levels that exceed the price and fair value of the share as a result of speculation, and secondly the weak liquidity in the stock exchange, as a result of the exit of investments from the money market without injecting new ones, which was reflected in stock prices and trading values, thirdly, the January effect, as Stock exchanges often rise during the month of January of each year due to companies announcing their financial results and injecting new liquidity, and the rising period is followed by the beginning of a decline that starts from April and continues until June.
He added: There are also external factors behind the decline, which are political tensions in the region, which affected the fears of foreign investors. Fifth, world economies are still negatively affected by the Covid-19 pandemic, which has affected financial markets.
For his part, Mohamed Kamal, a financial market expert, said that there are many reasons behind this great decline in the Egyptian Stock Exchange, on top of which are the political tensions in the region and the issue of the Renaissance Dam, which affected the concerns of foreign investors, the great rise of the EGX 70 index over a whole year from February 2020 until February 2021, when some stocks entered into profit-taking operations, in addition to the trend towards limiting the margin buying mechanism, which affected the volume of liquidity in the market and the psyche of local and foreign dealers.
“Kamal” added, to “The Seventh Day”, that the solution to the rise of the stock exchange is by attracting new proposals to attract new investors in the money market, by re-activating the government offering program and starting with major companies such as Banque du Caire to attract new liquidity with the bank offering at an attractive price that achieves a return to investors. Pointing in this regard to the successful experience of offering Telecom Egypt, which attracted a large segment of investors, and the same experience can be repeated at Banque du Caire, which has strong financial performance and investor confidence.
He also added that new tax incentives should be introduced to attract dealers, including a tax exemption for a specific period of investment in the stock exchange, and an exemption for companies to encourage them to register, pointing out in this regard that the number of companies that are removed from the stock exchange exceeds the number of listed.