|Al-Ahram Weekly On-line
7 -13 December 2000
|Published in Cairo by AL-AHRAM established in 1875||Current issue | Previous issue | Site map|
Holiday bluesBy Sherine Abdel-Razek
Market watchers have come to identify a specific pattern of trading occurring in Ramadan. During the first days of the holy month, trading activities drop dramatically, only to intensify towards the middle of the month. One factor accounting for this phenomenon is the reduction of trading hours, with the market closing one hour earlier at 2.00pm.
So far, Ramadan trading seems true to form -- especially given that the fasting month began in the middle of a corrective movement that stripped virtually all actively traded stocks of a portion of gains posted over the previous four weeks.
Overall market turnover was as low at LE419 million compared to LE652.2 million in the previous week. However, the market ended the week on a positive note with the all-share Capital Market Authority (CMA) index gaining 0.5 points to close at 624.89.
The number of companies whose stock increased in value over the week exceeded those suffering a decline at a ratio of 63:52. However, some of the most actively traded companies were in the losers' camp.
MobiNil lost LE2.83 of its value to close at LE79.4 surrendering the eighties territory it had claimed over the past few weeks. This downward movement occurred despite its being one of the market's busier stocks, accounting for 18.5 per cent of overall market turnover.
The adage "no news is good news" proved false for Orascom Telecom (OT) this week, having shed 0.16 points to close at LE61.23. Rumours that France Telecom and Telefonica Spain were considering the purchase of a stake in the company had given OT a boost in recent weeks. In the absence of a confirmation of such plans, however, investor enthusiasm waned.
For the second week in a row the Lakah Group holds the position of market leader in terms of the volume of shares traded. With 5.19 million shares changing hands, Lakah's transactions accounted for 32 per cent of overall transactions. The group is still capitalising on it's chairman's victory in parliamentary elections and the news that he is negotiating a debt-settlement agreement with banks.
In reaction to news that a Saudi investor is interested in buying the 47.8 per cent stake to be offered in the public sector Helwan Cement company -- a major player in the cement sector -- its stock ended the week at LE34.14 compared to its starting price of LE32.9.
Misr Hotels was another news-driven stock. Announcements that the government is considering privatising the company, boosted its stock by 15 per cent to give it a closing price of LE93.6.
Another public sector company that benefited from announcements hinting about the sale of a stake to a strategic investor was Eastern Tobacco. The company's share price climbed a nifty 6.7 per cent to LE68.33.
Oriental Weavers was another winner due to the buzz about privatisation. This private sector company is one of two bidders seeking to acquire the state-owned Damanhour Carpet Company. Oriental Weavers closed the week having advanced to LE35.9.
Ramadan was the obvious justification for limited trading in Al-Ahram Beverages Company (ABC), the only producer of religiously prohibited alcoholic drinks listed on the market.
On a positive note, the value of bond transactions more than quadrupled compared to the previous week. These transactions were valued at LE194.467 million, accounting for more than 30 per cent of the market's transactions.
But foreign investors seemed to be preparing themselves for Christmas purchases early this year as they divested LE42 million-worth of their holdings in Egyptian equities. Their purchases declined by 83 per cent from the previous week's level to reach LE36.7 million.
Consequently, traders' expectations for the coming weeks are mixed. While some are optimistic that transactions will revive by the middle of Ramadan, the majority believe that the dearth of news regarding any interesting deals related to blue chip stocks means that the market is in store for more of the same.
An EFG-Hermes report suggested that news of big deals would be necessary to re-capture the attention of foreign investors.
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