MARKET WATCH — Starting the year on a High
MARKET WATCH — Starting the year on a High
STOCK ANALYSIS: Iron & Steel for Mines & Quarries (ISMQ)
Written for Business Monthly - February 2024 Issue
MARKET WATCH
Last year was quite outstanding in performance across the market's two leading indices. The EGX 30 rose 70.5%, while the EGX 70 EWI almost doubled, up 95.3%. That marks the second consecutive year small caps outperformed large caps. Regionally, the Egyptian market outperformed the GCC markets, followed by Dubai (up 21.7%) and Saudi Arabia (up 14.2%).
Regarding investor trading behavior, Egyptians made the bulk of trading with some 84% of turnover, followed by Arabs (9%) and foreigners (7%). Meanwhile, individuals accounted for 69% of total market trading during the year, with institutions making up the remainder. CIB (COMI) remained at the top in market cap, ending 2023 at EGP 219 billion, with MOPCO (MFPC) almost 40% less at EGP 134 billion. Regarding average daily traded value, COMI topped the list with EGP 337 million, followed by Beltone Holding (BTFH) with EGP 194 million.
Stepping into 2024, it was a continuation of the same story. The EGX 70 EWI outperformed the EGX 30 from Dec. 15 to Jan. 15 (15.9% vs. 6.2%) and year-to-date (13.7% vs. 5.4%). The EGX 30, in particular, had been hovering around the 25,000 level by the end of 2023. Once investors returned from the New Year's Eve holiday, it was as if a genie were let out of a bottle: The EGX 30 has never closed below the 25,000 mark since then.
For 2023, ASCOM (ASCM) led gainers, up 522%, followed closely by Misr Hotels (MHOT), up 406%. So far in 2024, the leading role has been taken over by none other than Iron & Steel for Mines & Quarries (ISMQ), which jumped 135%, followed by Ataqa Steel (ATQA), up 77%. Both stocks also topped the leaderboard, up 148% and 98%, respectively. When asked about its stock's atypical performance, ISMQ's management denied the existence of any non-public material events.
Interestingly, the top 15 performing stocks during the period had an average price of about EGP 4 a share. That suggests that so-called penny stocks were leading the market, which reflects the sheer size of individual investors' contributions. They often like stocks priced below EGP 5 a share because they get a bigger bang for the buck trading them as small incremental price movement means large swings.
Some of those companies have yet to start reporting their full-year results, meaning their stock performance was driven by other factors. One reason could be that the rise in the dollar's value (against the Egyptian pound in the parallel market) caused a repricing of Egyptian assets.
STOCK ANALYSIS
Iron & Steel for Mines & Quarries (ISMQ)
Iron & Steel for Mines & Quarries (ISMQ) was born following the split of Egyptian Iron & Steel (IRON) into two separate companies back in 2021. At the time, ISMQ was hailed as the profitable segment of IRON’s business. Having traded the stock at around EGP 1.50 a share throughout most of last year, investors began to bid the stock higher lately. During the period, the stock rose 147% from EGP 1.47 to EGP 3.63, with 265 million shares changing hands worth some EGP 616 million.
