12 - 18 April 2001
Issue No.529
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Al-Ahram Weekly On-line 12 - 18 April 2001 Issue No.529 |
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Hope on the horizon
At last the market has witnessed an upward correction movement after its indices had danced around seven-year lows recently, trading having been burdened with concerns about regional political instability and repercussions from problems in global markets.
The average daily market turnover during the week ending 5 April reached LE60 million compared to a daily average of LE25-30 million during the previous month. Overall market transactions during the week came to LE254.8 million, as the Capital Market Authority index registered the good news of climbing 4.7 points to end the week at 600 points.
This movement was driven by a number of factors providing energetic movement in the market's main sectors.
The market's main mover, and its telecom sector star, MobiNil, gained strength during the week to close at LE55.71. MobiNil's gains could be attributed to expectations that first-quarter results, due next week, would be positive.
Moreover, the telecom leader's shareholders have another reason for joy following the company's signing an agreement last week with a number of local and foreign creditors to convert its $220 million loan to Egyptian pounds. MobiNil's decision aims at decreasing its exposure to foreign exchange losses in the future. However, the net impact of this decision is yet unclear as analysts note that the arrangement comes with a higher interest rate.
Housing and construction sectors have also bounced back with investors' hopes being raised about the potential recovery of the sector after the Shura Council (parliament's consultative body) approved the draft of the long-awaited mortgage law.
Cement also saw considerable activity following government announcements about the sale of a stake in a public sector producer. The sector leader, Suez Cement, has announced that it has received bids from three European companies interested in buying the 25 per cent stake the company is offering as a capital increase. This has heightened investor interest in the company to the extent that Suez captured the number two position on the list of most actively traded companies during the week. It traded LE33.865 million worth of shares and gained 12.8 per cent to close at LE38.49.
Among the active, but not the gaining shares, was that of the Lakah Group. Amid media reports that its founder and chairman Rami Lakah has been sentenced to a jail term and a fine, its shares lost ground over the week. However, the indefatigable Lakah has claimed that these rumours were false and stated his intention to sue for libel.
On a very positive note, the International Finance Corporation (IFC), the World's Bank investment arm, has agreed to invest $30 million in EFG-Hermes, Egypt's leading investment bank. IFC's loan will buttress EFG's efforts to expand its regional operations and establish new lines of business in Egypt.
IFC's move marks the first time an Egyptian investment bank has obtained access to medium-term funding, boosting EFG's status as a regional player.
Sami Haddad, IFC director for the Middle East and North Africa, was quoted by Reuters as saying that by supporting the regional expansion of a leading investment bank, IFC is contributing to the much-needed development and integration of regional financial markets and facilitating capital flows that create more attractive opportunities for global and regional investors.
The capital loaned by IFC will enable EFG to expand its presence by establishing joint ventures in the Middle East and explore new opportunities in North Africa.
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