DUBAI: Egypt’s stock market climbed to a 44-month high on Tuesday after the army chief was given the greenlight to run for president, while markets in the United Arab Emirates snapped a two-session decline.
The Supreme Council of the Armed Forces cleared Field Marshal Abdel Fattah al-Sisi to run in upcoming elections, which he looks sure to win. Many Egyptians see him as the best chance for political stability.
“Sisi still didn’t officially announce his bid for presidency, but all roads are leading in that direction because of popular demand,” said Mohammad Radwan, director of international sales at Pharos Securities in Cairo.
“People are more comfortable having Sisi as president rather than anyone else because it creates a sense of stability.”
Sentiment was also helped by Finance Minister Ahmad Galal saying the interim government would soon launch a second stimulus package of about the same size as the first one, 30 billion Egyptian pounds ($4.3 billion).
In a sign that Sisi may have to face a growing Islamist militant campaign, gunmen killed a senior Egyptian Interior Ministry official outside his home in Cairo Tuesday, according to security officials.
But for now at least, many investors feel the level of violence is tolerable. Cairo’s benchmark index rose 1.5 percent to 7,368 points, its highest level since May 2010.
It climbed above strong technical resistance at 7,248 points, the January 2011 high; a weekly close above that level would confirm a break. The index faces another major resistance at 7,693 points, the peak in April 2010.
Shares in EFG-Hermes rose 3.3 percent after the investment bank said it was arranging three initial public offers of shares with a combined value of over $300 million this year – Egypt’s first IPOs since 2010.
In the United Arab Emirates, Dubai’s bourse jumped 3.2 percent to 3,805 points, halting a two-day drop that was triggered by the global sell-off in emerging markets. It ended just short of Thursday’s five-year, intra-day peak 3,826 points.
Blue chip Emaar Properties jumped 6.3 percent to 8.24 dirhams, its highest close since September 2008, after EFG-Hermes raised its price target for the stock to 10.1 dirhams and upgraded it to a ‘buy, ‘citing improved sentiment toward growth stocks in the region and the strengths of Emaar’s own business, which saw strong gains in leasing and hospitality revenues during the first nine months of last year.
“Emaar represents a pure exposure for many investors who want to play these two themes and the increase in liquidity (into both the capital market and real economy) is supporting asset price appreciation which is reflecting positively on Emaar’s value,” EFG-Hermes said.
Some traders also cited talk that construction was starting on Dubai Hills Estate, a flagship development which is part of the Dubai government’s mega project Mohammed Bin Rashid City.
“The move in the market today was mainly retail-driven,” said Ali Adou, portfolio manager at The National Investor. “Overall, there is a strong momentum in the market as it is backed by a solid economic story.”
Abu Dhabi’s measure also ended its decline, climbing 1.3 percent.