Beltone Research reported on Saturday that the Central Bank of Egypt's decision to cut interest rates will lead to a significant benefit for some winners on the stocks market.
The report pointed out that the decision will positively reflect on improving liquidity in the Egyptian Stock market, expecting momentum in the trading of some companies, which will directly benefit from the interest rate cut.
“A good momentum in trading of some stocks, that are the main beneficiaries of the rate cut, could be observed, including Ezz Steel, Ghabbour Auto, Palm Hills, Sodic, Madinet Nasr for Housing & Development (MNHD), and Heliopolis Housing (HELI), And Orascom Construction," Beltone said.
According to the report, there is strong growth in profitability offered by Egyptian stocks of about 20.6 percent in 2019, compared to an average of 9 percent in the Middle East and Gulf region, and 8.6 percent in North Africa.
"Interest rate cuts are one of the main catalysts to continue the upward trend in the market; the other two incentives are successful implementation of the government offering program and rebalancing of other indicators including MSCI, FTSE, EGX30," the report added.
The Monetary Policy Committee (MPC) has decided to cut the deposit and lending rates and the price of the main operation by 150 basis points to 14.25 percent, 15.25 percent, and 14.75 percent respectively.
Besides, the credit and discount rate was also cut by 150 basis points to 14.75 percent.
In the meantime, the MPC cut 450 basis points out of 700 basis points raised by the CBE since the exchange rate liberalization of the pound in 2016.
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