SHUAA attributes EGX movements in 2018 to 3 forces

CAIRO – 25 December 2018: SHUAA Securities Egypt attributed the ups and downs of the Egyptian Exchange (EGX) in 2018 to three main forces.

SHUAA clarified that these forces are analysts’ earnings estimates as measured by forward earnings-per-share (EPS) for the index components, re-rating/de-rating as measured by a higher/lower forward price-to-earnings (P/E) ratio which is also partially affected by earnings estimates, and dividend yield (DY).




The above chart shows the EGX 30 total return attribution analysis on an annual basis, where the -10.7 percent ytd total return is linked to a P/E de-rating of -18.8 percent versus upbeat earnings estimate of 6 percent and 2.2 percent DY.

“EGX 30 index is currently trading at 9.9x forward earnings, a 15 percentdiscount to its 5-year historical average P/E and a 13 percentdiscount to MSCI EM, bowing to a sell-off wave that took its toll on the market in the last months. In addition, the index exhibited an above average dividend yield of 6 percent, almost double its 5-year historical average of 3.2 percent,” SHUAA added.





EGX ended Monday’s session in red, as EGX 30 declined 1.26 percent, EGX50 decreased 1.05 percent, EGX70 inched down 0.38 percent, and EGX100 went down 0.50 percent.