24 - 30 May 2001
Issue No.535
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Al-Ahram Weekly Online 24 - 30 May 2001 Issue No.535 |
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Big caps eclipse software malaise
Teething troubles suffered by the stock exchange's new trading floor software threw dealings into chaos, but good news from market big caps made up for it. Sherine Abdel-Razek reports
Last week, the market inaugurated its state-of-the-art new trading floor -- a move that was said will launch the local bourse into a new era of sophisticated trading. These high expectations, however, collided with reality when the delay in transactions and duplication of orders that prevailed during the week forced trading to stop 15 minutes early on Tuesday.
Frustrated investors have distributed caricatures mocking the Capital Market Authority and stock exchange officials, who were held responsible for the software's operating problems. According to market experts, the problem stemmed from not having tested the software for a sufficient period. These difficulties were reflected in thin trading activity throughout the week ending on 17 May, the overall turnover of which came to LE429.8 million, compared to LE427.9 for the previous week.
Otherwise, the market had an eventful week. The most prominent news was that of a majority stake sale in the Egyptian American Bank (EAB), Egypt's third largest private commercial bank in terms of assets, to a foreign investor. The deal's significance stems from the size of the stake -- around 75 per cent of the bank's equity -- and the weight of potential buyers, amongst whom are the Standard Chartered Bank (SCB) and the National Bank of Kuwait. The SCB, which was about to buy a controlling stake in Misr American International Bank last year, has repeatedly expressed its interest in the Egyptian market. Quoted by Reuters, its chief executive, Rana Talwar, said, "We feel if the right opportunity were to turn up in Egypt, it would round off our presence in the Gulf."
EAB's two major shareholders -- the Bank of Alexandria and American Express Bank -- holding 33 and 41 per cent of EAB's equity respectively, signed a memorandum of understanding at week's end saying they have agreed to sell up to 100 per cent of their EAB shares. The bourse suspended trading in EAB shares on Thursday for some time following the release of the statement. On resumption, shares moved up LE2.56, or five per cent -- the maximum allowed per session -- to LE53.90. Fed by recent speculation on foreign interest in its equity, the value of EAB's shares jumped by 60 per cent from a low of LE32.03 on 13 March. EAB's calendar 2000 net profit had dipped to LE72.54 million from LE100.01 million in 1999.
In the meantime, the Commercial International Bank's (CIB) net profit increase for the first quarter of calendar year 2001 failed to push its shares up. The bank posted net profits of LE99.27 million for the first quarter of calendar 2001 compared to LE95.3 million in the corresponding period for the previous year. CIB closed at LE34.95, shedding LE0.28. Traders said the bank's shares retreated because investors had hoped for higher profits.
Egypt's sole brewery, Al-Ahram Beverages Company (ABC), attracted much attention throughout the week by buying back some of its traded stocks under a share incentive scheme it has adopted for its administrative staff. After purchasing LE30.7 million worth of its own shares, ABC's total transactions accounted for eight per cent of overall market transactions and the company's share price climbed to LE 44.5, compared to LE41.64 at the beginning of the week.
Another market big cap that offered good news was Orascom Telecom (OT), which has expressed interest in buying a controlling stake in Pakistan's state-owned telecommunications company. This came soon after the Pakistani military government announced plans to sell a 26 per cent stake, along with management control, in Pakistan Telecommunications Ltd (PTCL), which has a monopoly in the country. OT, which has a strategy to expand regionally, had previously expressed its desire to win the deal due to the size of the Pakistani market. OT now owns 80 per cent of TeleCell, which runs mobile telephone networks in 12 African countries, in addition to 88 per cent of Pakistani mobile phone company, Mobilink. It also holds a 63 per cent stake in the Jordanian mobile phone company, Fastlink. Moreover, OT won a licence for joint operation of the first GSM mobile network in Syria with the German firm, Siemens. OT's shares gained LE 1.07 on the news, closing at LE 34.88.
Another member of the Orascom group of companies, Orascom Construction Industries (OCI), together with the Swiss Krupp Polysius, won a LE434.6 million contract to build, for Ameriya Cement, now a subsidiary of Portugal's Cimpor, a new production line with a capacity of 1.4 million tons of clinker per year. Work will commence in early June and is expected to be completed in 27 months.
The cement sector did not fare very well again this week with the absence of news on its awaited privatisation deal. Suez Cement's annual general meeting held on the last day of the trading week approved a LE2 dividend pay-out, not living up to shareholders' expectations of LE 2.75. Furthermore, the meeting was concluded without any news about the company's receiving bids for its capital increase. Suez Cement, nevertheless, affirmed its commitment to go ahead with the sale, even if there was only one bidder, subject to shareholder approval. The company's shares ended the week marginally higher at LE35.5.
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