31 May - 6 June 2001
Issue No.536
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Al-Ahram Weekly Online 31 May - 6 June 2001 Issue No.536 |
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Cautious anticipation
As Egypt's entry in the Morgan Stanley index draws near, market players have reasons to be both hopeful and sceptical. Sherine Abdel-Razek reports
With the approaching date of Egypt's inclusion in the Morgan Stanley Emerging Markets Free index, the market has been rife with a mix of expectations. While some believe the entry -- which global fund managers use to track emerging bourses -- will pull Egypt's stock exchange out of its recent doldrums, others are doubtful about its likely returns after a valuation change halved the country's probable weighting. Morgan Stanley's new method, which adjusts the weightings of stocks according to the size of their free float, risks making Egypt tiny enough to be overlooked by global investors when it is included on 31 May.
Meanwhile, market sectors had a mixed performance on the week ending 24 May. While merger and acquisition deals gave the banking sector a lot to celebrate, the cement sector was put on the slide by the lack of any concrete news about its privatisation deals. Overall turnover came low at LE322.2 million compared to LE429.8 million on the previous week. The all-share Capital Market Index has marginally declined by 0.04 points to close at 624. Foreigner activity was moderate during the week, with their buying orders counting for 10 per cent of overall market transactions, while their selling orders came at 11 per cent.
A week after news that the Asian specialist Standard Chartered Bank expressed interest in buying 75 per cent of shares of the Egyptian American Bank (EAB), France's Credit Agricole was able to acquire a majority stake in Credit International d'Egypte (CIE), an Egyptian commercial bank with 6.7 per cent of its shares listed on the exchange. Under the deal, British HSBC's 93.3 per cent stake in CIE will now be transferred to Credit Agricole Indosuez and the local El-Mansour and El-Maghraby business group. The value of the deal has not been announced yet.
HSBC's decision to divest its holdings in CIE follows HSBC's consolidation of its position in Egypt through an increase in shareholding from 40 per cent to over 90 per cent in October 2000 in the Egyptian British Bank (EBB), now renamed HSBC Bank Egypt. Credit Agricole has been seeking acquisitions in Egypt after its Credit Agricole Indosuez bid for Misr America International Bank (MAIB) last year was unsuccessful.
While still capitalising on the news of its pending acquisition by a foreign bank, EAB has announced its first quarter results that came almost flat when compared to the corresponding period of the previous year. The bank, ranked the third Egyptian private bank in terms of asset value, has posted net profits of LE30.48 million in the three-month period ending 31 March 2001, compared to LE30.06 million for the same period in 2000.
The telecom sector gained some momentum. Market bellwether, MobiNil, rose after Prime Minister Atef Ebeid announced last week that the third mobile phone operator would be required to pay a license fee. Earlier talk that the new mobile company would be exempted from paying the fee worried some industry players who feared such a privilege would enable the new company to lower subscription rates substantially and lure clients away from existing mobile companies. Ending at LE71.22, MobiNil has jumped from LE50 in less than two months. The company typically topped the most actively traded companies list, with LE23.5million worth of its shares changing hands during the week.
The cement sector was hardly hit by the lack of any news concerning bids for Helwan and Suez. Analysts believe the government's reluctance to offer a majority stake in the companies has rendered the offers unattractive to foreign investors. However, Suez Cement was supported by a LE2 dividend payable by the end of the month and ended in positive terrain at LE35.9. Helwan was in the losers camp, shedding LE3.13 to close at LE35.73.
Parliament's confirmation of businessman Rami Lakah's parliamentary immunity from prosecution bolstered Lakah's shares.
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