11 - 17 January 2001
Issue No.516
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Al-Ahram Weekly On-line 11 - 17 January 2001 Issue No.516 |
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Inauspicious beginnings
The first week of the year witnessed limited trading which rose and fell from one session to the next. This had been preceded by a healthy upward-trend in activities on the last trading day of the year, 4 January, writes Sherine Abdel-Razek. The market ended that week on a positive note with its all share Capital Market Authority index gaining 3.63 points, to close at 635.78 points.
That this trend would be short-lived was suggested by the modest value of transactions during that first week. These reached only LE354.131 million compared to an average of LE1.7 billion during each of the four trading weeks of January 2000.
Foreigners continued to be circumspect about the soundness of the market as evidenced by the fact that they were net sellers, accounting for selling orders of LE84 million compared to purchases assessed at LE80 million.
The IT sector -- despite the downward trend hitting telecom stocks worldwide -- remained at the centre of the news, continuing to play the role of market mover. Last week saw France Telecom increase its investments in Egypt's mobile phone sector when it, along with local Orascom Telecom (OT), purchased Motorola's 51 per cent stake in the Egyptian Company for Mobile Services (ECMS), known as MobiNil. This purchase means that France Telecom has increased its holdings in MobiNil Telecommunications from 46.1 per cent to 71.25 per cent, while OT's stake has increased from 18.6 per cent to 28.75 per cent.
But France Telecom's involvement in the local telecom sector seems to be only beginning, as it also announced its intention to transfer its holdings in MobiNil to its mobile phone division, Orange Group, after the latter's initial public offering is completed.
A press release issued by MobiNil quoted president and CEO of ECMS Osman Sultan as saying that the deal will strengthen the position of the two major shareholders in ECMS -- who intend to expand further regionally and internationally.
For its part, Orascom Telecom is strengthening its regional position, having announced that it increased its stakes in both Jordan Mobile Telephone Services and Pakistan Mobile Communications Limited by purchasing the entirety of Motorola's stakes in these companies.
Shares of MobiNil and OT, however, failed to capitalise on this news, as both shed LE2.5 to close at LE71.4 and LE48, respectively. Traders believe that OT stock will continue to decline in the short term as investors scramble to liquidate their positions before the lock-up period for pre-IPO investors -- who own an estimated 30 per cent of the company -- expires in about two weeks time. Those investors were forbidden from trading their stocks during the six month period following OT's IPO in July and bourse observers are predicting that many of them will try to unload their holdings as soon as they are able.
MobiNil also retained its leading position as the most highly-traded stock with LE60.2 million worth of its shares changing hands, thereby accounting for 16.75 per cent of market turnover.
Transactions in cement companies were buoyant amidst news that the government is seeking an anchor investor for a 20 per cent stake in Helwan Portland Cement. As a result, Helwan Portland's stock climbed LE5.2 to close at LE39. National Cement also inched its way up last week, closing at LE12.46, having gained LE1.26.
Chipsy, the potato chip manufacturer, maintained its presence on the list of gainers where it has resided for the last month, jumping in value by 15 percent to close at LE11.25. This foodstuffs company got a boost from anticipation regarding the imminent announcement of the outcome of negotiations for a merger with other producers in this sector.
The Holding Company for Financial Investment (Lakah Group) also generated buyers' interest throughout the week thanks to rumours that it was negotiating with a French consortium to jointly purchase Sainsbury's Egypt. But these were not the only rumours surrounding the Lakah Group, which is alleged to be considering the purchase of one of the national department stores that the government is planning to put on the block.
With 6.35 million shares traded, Lakah was the most actively traded company in the market during the week in terms of the number of shares traded.
Transactions in the bond market stood at LE49.59 million, accounting for 14 per cent of the overall value of transactions.
Based on international and local factors, traders in the Egyptian bourse were optimistic about the possibility of a revival in the coming period. They expect that the reduction of interest rates by the US Federal Reserve Bank will energise capital market transactions worldwide. And, on the local level, privatisations expected to be effected in the coming months should inject new vigour in the market.
Related links:
Cairo and Alexandria stock exchanges
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