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Al-Ahram Weekly On-line 16 - 22 November 2000 Issue No.508 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 16 - 22 November 2000 Issue No.508
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters The courage of the climb
By Sherine Abdel-Razek
For the fourth week, market forces pushed ahead in what appears to be a veritable revival of brisk trading activity. The overall market turnover came in at LE558.3 million for the week ending 9 November, up from LE485 million the previous week.
Proving that the best medicine for stale activity is sheer confidence, last week's mixed performance led off with a strong start that pushed investors to grab their money and run, rather than hold out for higher gains. By the middle of the week, this rush to liquidate stocks had quickly stripped main market movers of most of the gains made in the early days of the week. By the end of the week, however, trading had stabilised, with the Capital Market Authority Index ending 9.09 points higher than the previous week.
The week's recovery could partly be attributed to the increase in foreign acquisitions, which totalled LE141 million. The figure is almost double the value of foreign selling for the same period -- a reversal of market trends in September and October, when foreign sell-offs consistently out-paced buying activity and the market plunged to its steepest decline in six years.
Strong moves being taken to facilitate foreign exchange transactions for non-Egyptian investors -- particularly with regard to the foreign selling receipts -- are expected to entice further foreign investment. Misr Settlement Clearance and Central Depository company, Egypt's sole securities clearance company, announced last week that foreign investors will be able to acquire their selling receipts in foreign currencies as soon as four days after the transaction is completed.
Strong market performance was also fed by increased telecommunications stock buying, particularly the market's main movers, MobiNil and Orascom Telecom (OT). The surge is a natural outcome of news that France Telecom is currently in competition with the Spanish telecommunication company Telefonica to acquire a yet undetermined stake of Orascom Telecom, which owns 25.1 per cent of MobiNil. The news came only days after the announcement that France Telecom, which also owns a 23 per cent stake in MobiNil, has agreed to join OT in a buy-out of the American company Motorola's shares in MobiNil. Motorola holds 18 per cent of MobiNil.
News of the joint venture, along with the France Telecom-Telefonica bidding war, has buoyed the buzz around Orascom Telecom. It closed 5.91 per cent higher this week at LE55.84 and cornered LE56.8 million worth of the market's transactions. No less lucky, MobiNil saw considerable activity during the week, with an impressive LE166.6 million worth of its shares changing hands. MobiNil closed at LE87.4.
Source: EFG-Hermes Changes in MobiNil and Orascom Telecom shares during the last four weeks.
Source: El Eman Brokerage.
Also figuring into market forces this week was the implementation of a LE70 million deal under which the American insurance company AIG acquired 90 per cent of the privately-owned Pharaonic Insurance Company. Pharaonic Insurance, established in 1993 with LE30 million in capital, holds less than one per cent of the overall investments in the still government-dominated insurance sector.
Another busy stock this week was Media Production City. The media conglomerate announced that it has posted LE37.8 million in net profits for the first nine months of 2000, compared with LE17.16 million in the corresponding period last year. The news has offset the negative effects of the company's last extraordinary general assembly, which failed to quell investors' fears about the deteriorating price of the company's shares.
Finally, last week's parliamentary elections made their mark on market forces, perhaps most prominently in the case of businessman Rami Lakah, chairman of Lakah Group, who was elected in a landslide victory to the professionals' seat in downtown Cairo. The fuss around Lakah's right to hold a seat in parliament after being proven to hold dual nationality in Egypt and France, sent the Lakah group's shares on a roller coaster ride through LE28.7 million worth of transactions -- one of the busiest stocks of the week. The stock ended marginally lower than earlier in the week at LE2.97. Lakah won the vote, but he still awaits the result later this month of his appeal against the court ruling that barred his candidacy for the elections.
The increased activity of cement and construction companies' stocks probably stems from optimism that the new parliament will finally pass the long-awaited mortgage law in December. AIC and Nasr City Housing had an active trading week, with LE2.2 and LE5.1 million worth of their shares traded respectively. Another lucky stock was Orascom Construction Industry, which benefited from its LE30 million deal with Procter and Gamble to build an expansion for the company's plant near Cairo. The stock rose, closing at LE38.22, compared to LE37 at the beginning of the trading week.
Related stories:
The politician versus the businessman 9 -15 November 2000
Business blues 24 - 30 August 2000
Going global 20 - 26 July 2000
Market poised for recovery 4 - 10 May 2000
Why the market decline? 28 May - 3 June 1998Related links:
Orascom Technologies (OT)
MobiNil
Lakah Group
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