3 - 9 May 2001
Issue No.532
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Al-Ahram Weekly On-line 3 - 9 May 2001 Issue No.532 |
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Market report
Revival holds up
Stocks were pulled to the upside after a second CBE rate cut in two weeks and news of a government stake sale in a major cement company, reports Sherine Abdel-Razek
The market was invigorated this week on heartening news of a further 0.5 per cent reduction in the Central Bank of Egypt's discount rate, as well as expectation of Egypt's inclusion in May in the Morgan Stanley index.
The performance of Helwan Cement share through the last three months
The volume of transactions came to LE312.7 million, compared to LE201.4 for the previous week. Foreigners were net buyers during the week ending 26 April, with their buying orders accounting for 19 per cent of overall market transactions, compared to only 10 per cent worth of selling orders.
The revival was also nourished by the government's long-awaited sale of a near 48 per cent stake in Helwan Portland Cement (HPC). The company announced that the sale has attracted the interest of three foreign-based investors and one local company ahead of an open offer bidding process starting 1 May.
In addition to Mexico's Cemex and the Egyptian Cement Company (ECC), a subsidiary of Orascom Construction Industries (OCI), two other foreign-based companies, one with a local presence in Egypt, had shown their interest in the offered stake.
Egypt's cabinet privatisation committee approved in February the plan to sell the state's remaining stake in Helwan, totalling 12 million shares. This came a year after the government's freeze of privatisation in the sector for fear of foreign domination.
Four multinational cement companies entered the Egyptian market after having bought majority stakes in four local cement producers in late 1999 and early 2000. Mexican Cemex, British-based Blue Circle, Portugal's Cimpor and France's Lafarge now dominate around 30 per cent of the sector.
Both HPC and Suez Cement attracted good buying interest, topping the list of the most actively traded shares of the week. HPC's stocks rose by LE3.5 to close at LE44.1, with LE40.25 million worth of its shares changing hands. Suez Cement's shares rose by LE1.33 to close at LE33.28.
Analysts expect the HPC deal will be concluded at an attractive price because of the government's need for money and its desire to raise the credibility of Egypt's privatisation programme and general investment climate. A report issued by the Commercial International Brokerage Company (CIBC) pointed out, however, that HPC's assets are poorly valued due to a number of problems suffered by the company-- production inefficiencies, environmental hazards caused by the highest emission levels among cement companies and limited expansion options due to the government's ban on horizontal expansion in urban areas for ecological reasons.
Meanwhile, the NASDAQ's mid-week decline negatively affected the local telecom sector. Both Orascom Telecom (OT) and MobiNil ended with marginal gains of 1.8 and 0.9 per cent respectively, to close at LE28.9 and LE 62.35. Both companies retreated on the most actively traded list to third position for MobiNil and sixth for OT.
Egypt's biggest private sector bank, Commercial International Bank, gained LE1.7, closing at LE37.7. Demand for the bank's shares rose after its announcement of a LE3.75 dividend distribution next week.
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