3 - 9 January 2002
Issue No.567
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Al-Ahram Weekly Online 3 - 9 January 2002 Issue No.567 |
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Bad news for bankers
The Capital Market Authority (CMA) is looking closely at transactions that took place in Egyptian American Bank (EAB) shares just before the UK-based Standard and Chartered announced that it was pulling out of negotiations to acquire the bank. With its announcement that a pending deal was off, EAB also said that the bank was no longer for sale.
Abdel-Hamid Ibrahim, chairman of CMA has been reported saying that it is investigating the matter to find out whether some shareholders had obtained insider information about the cancellation of the Standard and Chartered deal, enabling them to sell their shares at a high price before the announcement was made public and the stock began to shed value.
Last week EAB shares dropped by five per cent each day -- the maximum decline allowed under CMA regulations. By last Thursday, a week following the announcement, the share had lost LE10.67 to close at LE36.6, having shed 22 per cent of its value. Other banks also suffered fallout from the cancellation of the deal. The Nationale Societé Générale Bank lost LE0.7 to close at LE22.37, while the National Development Bank was hit less hard, losing LE0.28 to close at LE8.80. Commercial International Bank bucked the trend by gaining LE0.4 to close at LE27.91.
Despite the bad news for bankers, the CMA's general market index was up 2.58 points to close at 611.34 on Thursday 27 December. Of the 181 stocks traded, 84 rose, 43 fell and 54 remained static.
Telecoms shares also had a difficult week. Orascom Telecom Holding Company's share fell by LE0.62 to close at LE13.58. The Egyptian Company for Mobile Services also lost LE1.13 to end the week at LE34.02.
Housing and construction shares fared better than those of telecoms and banks and observers are hopeful that the sector will revive now that the draft mortgage law is being reviewed for a second time by the People's Assembly. Mahmoudia General Contracting rose by 10.8 per cent to close at LE3.17. Mukhtar Ibrahim's shares rose by 10.2 per cent to close at LE9.87. Cairo Housing and Development also closed up LE0.2 at LE1.68.
However, Orascom Construction Industries fell by 3.6 per cent to close at LE30.95. Trade in Arab International Construction (AIC) was suspended by the stock exchange for the third consecutive week. The bourse had suspended trading in AIC shares following the company's failure to disclose its second quarter results.
The optimistic mood prevailing in the construction sector gave a boost to the cement sector. This sector is also expected to benefit from the rise in the value of the dollar that will probably put a damper on the import of cement, consequently making the local product more competitive. Suez Cement was up LE1.04 to close at LE32.7.
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