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Al-Ahram Weekly 18 - 24 November 1999 Issue No. 456 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 18 - 24 November 1999 Issue No. 456
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Special Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Reasons to be cheerful
By Sherine Abdel-RazekLast month's cabinet reshuffle, and the resulting investment-friendly agenda that emerged, had a positive effect on the market, which for the first time this year , found a reason to be cheerful.
Optimism occasioned by the reshuffle and reinforced by the easing of the crunch in local and foreign currency markets, was further fuelled when Merrill Lynch up-graded its assessment of the Egyptian market's performance from neutral to over-weight. In response, the Capital Market Authority's (CMA) index climbed by 4.99 per cent to reach 538.72, its highest ever --39 per cent higher than at the beginning of the year.
Traded shares recouped earlier losses in a rally that saw the market capitalised at LE104.6 billion by the end of October, compared with LE95.8 billion during the previous month. The value of transactions during the month increased by LE500 million to reach LE3.1 billion.
Overseas buyers were noticeably active in the revival, with foreign orders peaking at LE903.6 million, a figure boosted by Sainsbury's increasing its stake in the Egyptian Distribution Group to 80 per cent. During the same period, foreign buyers off-loaded LE442.5 million worth of shares.
Foreign interest in the market, further stimulated by the rumour that it will soon be included on the Morgan Stanley Capital Index for Emerging Markets, manifested itself in a flurry of acquisition activity.
Credit Agricole Indosuez joined Standard and Chartered, the Dutch ABN Amro bank and a consortium led by the National Bank of Kuwait in bidding for a majority stake in Misr America International Bank. The green light was also given to bids for the state-owned 80 per cent stake in Misr Iran Development Bank. In a parallel development, the International Finance Corporation(IFC), the investment arm of the World Bank, acquired a 10 per cent stake in the local investment house HC Securities and Investment Bank. The remaining equity of the three-year-old company is mostly held by Hussein Choucri (63 per cent), the company's founder, and Morgan Stanley Middle East (27 per cent).
October also witnessed the Central Bank's go-ahead for the Bahrain-based Arab Banking Corporation's acquisition of a 93 per cent stake of the Egypt Arab African Bank, bringing to an end two months of speculation following the rejection of a bid submitted by the United Bank of Egypt (UBE). The Central Bank has so far refused to disclose its reasons for blocking the UBE bid, which was higher than the LE50 a share offered by the Arab Banking Corporation.
Major players in this month's market include MobiNil, Commercial International Bank (CIB) and El-Ezz for Steel Rebars. Just 20 listed companies accounted for 80 per cent of the month's transactions, with MobiNil and CIB alone accounting for 50 per cent of total transactions.
CIB had a particularly good month, ending October at LE37 after spending months within a LE29-32 band, the surge occurring in response to news that the bank had recorded a 19 per cent increase in net profits for the first three quarters of the year, up to LE265 compared to LE222 million in the corresponding period of last year.
El-Ezz for Steel Rebars was also heavily traded, as well as hitting the headlines when an extraordinary general meeting of its main competitor, Alexandria National Iron and Steel (ANSDK), approved its acquisition of a 20 per cent stake and in the process representation on ANSDK's board. Interest in the two companies was peaked with their victory in a jointly-filed anti-dumping suit brought against Turkish steel exporters. Duties of up to 60 per cent will now be imposed on Turkish steel exports.
Trading in bonds remained sluggish, accounting for no more of six per cent of October's turnover, with treasury bonds 2000 and 2003 dominating transactions.
Egyptian GDRs listed on international markets stabilised at last following a period of downward pressure exacerbated by the 0.25 per cent increases in interest rates announced by the Federal Reserve Bank and the Bank of England. Six out of eight internationally listed Egyptian GDRs registered positive gains during October, with CIB registering a 30 per cent increase and Al Ahram Beverages 23.4, following its receipt of a high corporate credit rating from Standard and Poor's -- the first such industrial rating in Africa.
Market buoyancy was reflected in the improving performance of investment funds, which registered an average yield of 3.6 per cent compared with last month's negative return of 3.1 per cent. The average yield of the 21 funds during the ten-month period starting in January 1999, however, is still a negative 2.9 per cent.
