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Al-Ahram Weekly 17 - 23 February 2000 Issue No. 469 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 17 - 23 February 2000 Issue No. 469
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Focus Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Market in overdrive
By Sherine Abdel-RazekGood tidings in January. In a shorter than usual trading month, that included the Bairam holiday, the market continued its three-month upward trend as transactions boomed, pushing indices to an all time high. The general market index peaked at 673 points, compared to 624.5 in December, while the volume of transactions was LE6.49 billion, almost twice the average monthly figure for last year.
The heavy demand on shares inflated the value of most actively-traded companies, resulting in a market capitalisation of LE138 billion, compared to LE91 billion in January 1999. The growth was largely fed by mushrooming interest, both foreign and local, in the cement sector.
The list of the 20 most actively-traded companies during the month includes five out of six cement companies listed on the Stock Exchange. Helwan Cement registered the highest gains, recording a 64 per cent increase during January to end the month at LE63.65. Ameriya cement, currently the target of a number of aggressive bids aimed at acquiring between 65 to 80 per cent of its equity, gained 60.14 per cent to end the month at LE82.
The battle over Ameriya began with the French company Lafarge and Titan from Greece joining forces to battle with the local Orascom Construction Industries. Amid rumours that other interested parties would table bids, the competitors increased their offers. Blue Circle, the British company that acquired a 74 per cent stake in Alexandria Cement last November, subsequently entered the battle, as did the Egyptian Cement Company and the Portuguese Simbor, in a joint venture. The latest newcomer to the battle is the newly formed Al-Ahram Cement Company, jointly- owned by the remaining state-owned cement companies, whose interest is interpreted as being a move to counter any trend to monopolise the market by either foreign or local investors.
This ongoing battle reinforced the upward trend in the sector occasioned by the conclusion of the LE1.32 billion acquisition by Suez Cement of a 65 per cent stake in Torah Portland Cement. The deal resulted in Torah shares being the second most heavily traded in January.
Market capitalisation was further boosted by Egypt Telecom's (ET) listing on the Stock Exchange. The move is generally viewed as a preliminary step towards floating a rumoured 20 per cent stake of the company within a few months. ET's inclusion in the market increased overall capitalisation by LE19.5 billion.
The performance of the telecommunications sector was further enhanced by MobiNil retaining its position as the most heavily traded stock, cornering 39 per cent of market transactions during the month. Better than expected quarterly results saw its share price continuing to rise throughout the month to reach LE187 at one point, before falling to end the month at LE174.
Egyptian National Telecommunications and the Jordanian Phone Company bought an additional 10 per cent of the Egyptian Company for Telephone Equipment (ECTE) just a month after having forked out LE91 million for their 80 per cent stake in ECTE
The Media Production Company was also the subject of heavy trading following government approval for establishing a free zone for media production enjoying full privileges granted under the current investment law. Rumours that Eurodisney is considering taking a majority stake in the company increased activity, with the company's shares ending the month at LE40.96, 41per cent higher than they began.
The improvement in share prices was reflected in the performance of the 21 local investment funds, with the best performer, the Egyptian Gulf Bank fund, reporting a positive yield of 11.5 per cent.
The bond market, though, continued its desultory course, registering only LE47 million worth of business during the whole month, to account for only 0.74 per cent of market turnover, compared to 1.7 percent in December.
Local buoyancy extended to Egyptian shares listed on international markets. Six out of the eight Egyptian global depository receipts recorded positive yields ranging from 2.3 per cent for Lakah Group to the 46 per cent registered by Al-Ahram Beverages.
The market, then, remains highly attractive, with its dividend yield reaching 13.2 per cent, compared to the current 9.27 per cent on bank deposits.
