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Al-Ahram Weekly 29 July - 4 August 1999 Issue No. 440 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 29 July - 4 August 1999 Issue No. 440
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Profile Travel Living Sports Time Out Chronicles People Cartoons Letters Tight liquidity reduces trading
By Sherine Abdel-RazekThe market witnessed quiet transactions during the week ending 22 July with its index losing 3.05 points to close at 489.5. This was accompanied by a retreat in the value of transactions to LE455 million compared to an average of LE600 million worth of transactions per week recently.
This thin trading is attributed to a lack of liquidity due to the rising interbank interest rate and the beginning of Egypt's second Shopping Festival. The interbank interest rate jumped overnight last week to the vicinity of 14 per cent, its highest level in three years. This compares with 11.75 per cent a month ago. Besides tightening the available liquidity in the market, such an increase, if it continues, will push up interest rates on bank deposits and thus reduce the appeal of the securities traded in the market as high-yield investments.
On the other hand, the Shopping Festival which started 20 July was preceded by a wave of investors liquidating their positions to invest their money in a variety of goods in order to sell them during the festival.
Foreign participation was weak, making the market situation even worse. Foreign buying orders were at the same level as selling orders, accounting for 15 per cent of overall transactions.
Moreover, most of the market's attention was directed at two shares, MobiNil and the market newcomer Chipsy for Food Industries. MobiNil by itself cornered 54 per cent of the overall value of market transactions. It ended the week 5.8 per cent lower at LE79.22 as investors sold their holdings of the shares to realise capital gains. In its second week of trading, Chipsy had a significant share of market transactions to post a 15.57 per cent gain in its shares. It closed at LE13.29.
Topping the list of important market-related events during the week was the cancellation of LE600,000 worth of transactions in Arabia Housing and Development shares. This represented the total value of transactions in these shares from 8 June till 21 July. The cancellation decision came after an investigation by the Capital Market Authority (CMA) revealed there had been manipulative buying and selling orders aimed at moving the share price up and down to realise gains. The company's shares jumped from LE14.45 in early June to LE23.8 on 17 June. Then they followed a downward trend due to a hot wave of selling which resulted in a decline in the share price to LE14.3 at the beginning of this month. The CMA started its investigation after traders expressed doubts about what they saw as unjustified movements in the share's value.
On the banking front, newspapers spoke of an expected merger between two of Egypt's private banks, Misr Exterior and Misr International Bank (MIBank). If the merger is finalised, it will result in the birth of a huge banking entity with overall assets of LE14.3 billion.
The main loser in the market in recent weeks, Misr for Duty-Free Shops, has started to recover. The company registered a 6.05 per cent increase during the week amid news that its parent firm, the Holding Company for Housing, Tourism and Cinema, is considering buying back Misr's shares which were privatised two years ago.
