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Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 23 - 29 March 2000 Issue No. 474
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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 Travel Living Sports Profile People Time Out Chronicles Cartoons A cool month
By Sherine Abdel-Razek
Keen to stress the importance of human resource development, Mrs Mubarak insisted that the flow of capital into developing countries must be translated, not only into productive investment, but as well "help in the protection and development of its human resources". The prolonged honeymoon which the new government has enjoyed with the markets, since the appointment last October of Atef Ebeid as prime minister, appears to have ended. During the three months following the cabinet reshuffle, three public cement companies were sold to foreign anchor investors, prompting an upward surge in share prices that pushed the market to new highs and effectively camouflaged long-running concerns over escalating interbank rates and a fluctuating exchange rate.
Bidding over Ameriya cement marked the beginning of the end of the honeymoon. Amidst fears of foreign dominance over what was until recently viewed as a strategic sector, the government ham-fistedly intervened in the sale process, sending conflicting signals to investors. First it gave a green light to the hastily formed semi-public company Al-Ahram Cement, which appeared out of the blue to enter the competition for Ameriya. Then three weeks into the bidding process it was announced that only bids targeting at least 90 per cent of the company would be considered. To cap its interventions, the government subsequently announced the suspension for an indefinite period of any further privatisations in the sector.
The cement-led market boom ground to an abrupt halt. During February, deals in the shares of Portland Helwan -- rumoured to be the target of yet another anchor investor -- alone accounted for five per cent of overall market transactions -- a situation that, over the past three weeks, has gone into reverse.
To compound market pessimism, concerns over escalating interbank rates led to a drop in prices in the banking sector, while investors in MobiNil, for long a main market mover, appear content to take their profits following its January high of LE187. As a consequence the capital market index fell from 673 to 665 in February, wiping more than LE2 billion off share prices, while the value of traded securities during February came in at LE4.44 billion, 31.5 per cent lower than in January.
The more cautious outlook has extended to GDRs in foreign markets. While all eight Egyptian GDRs lost ground during February, CIB, Suez Cement and Al-Ahram Beverages shouldered the heaviest losses, shedding 20.3,19.8 and 18.9 per cent of their values respectively.
Investment funds did not fare any better, with the 21 funds registering a negative return of 6.3 per cent, a result of declining share prices and of investors deserting the funds to realise capital gains following January's positive results.
However, the market has witnessed a number of important events related to a number of its front-line players since February.
Meanwhile, the Media Production City flotation -- which planned to increase the company's capitalisation to LE1.45 billion distributed over 145 million shares -- closed early in February two times oversubscribed. The shares were among the market leaders during the period, with transactions accounting for 12 per cent of market turnover during February. Media Production City shares ended February at 57.55, compared to 40.96 in January.
CIB's announcement of its 1999 results also gave room for hope. The bank revealed a13 per cent increase in dividends, from LE4.25 in 1998 to LE4.8. It posted net profits of LE350.8 million compared to LE310.2 million for the previous year, and also revealed that it has formed a consortium with ACE to acquire 98 per cent of American Egyptian Insurance, currently held by El-Chark Insurance.
Orascom Telecom, which owns a 27 per cent stake in MobiNil, has succeeded in acquiring an 80 per cent stake in the African mobile network operator Telecel International in a deal valued at $413 million. Orascom Telecom, as a result, now has mobile licenses in11 African countries .
