7 - 13 March 2002
Issue No.576
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Al-Ahram Weekly Online 7 - 13 March 2002 Issue No.576 |
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Stumbling along
Deprived of a long-awaited impetus on the macro-economic level, the market is still in the doldrums. Sherine Abdel-Razek reports
Mixed performance would be the most accurate description of the market in the week ending 28 February, with individual shares reacting positively to some good news early in the week only to be weighed down by the overall slipping trend at week's end.
source: EFG - Hermes
The movement is pegged to the continuing lack of market trust by foreign investors, who are still awaiting concrete economic policy reforms, and the time to assess their impact on the macro-economic environment.
Regional political unease heated by talk about the planned US strikes on Iraq is doing little to help the local market situation. Analysts are also attributing thin trading to the fact that even local investors were fishing for a bottom in the market, waiting to pick up stocks a little more cheaply. Overall market turnover came at LE1.7 billion -- approximately double that of the previous week. A closer look reveals, however, that it has no correlation to a market revival. An ownership transfer transaction of Exxon Mobil-Egypt, alone accounted for LE1.3 billion of the overall figure. Of the remaining LE400 million, bonds transactions cornered LE306 million.
Despite the continued lacklustre performance, the week witnessed the narrowing of the gap between the official dollar exchange rate for the pound and the rate offered on the black market. The non-official exchange rate declined to LE4.9, compared with LE 5.75 a few weeks ago. Some market experts are more cautious in their response, attributing the recovery to an anaemic business environment that had reduced demand on the dollar.
The housing and construction companies reacted positively to news about government initiatives to help the real estate activities through a special housing fund and new mortgage legislation. The Central Bank of Egypt (CBE) also announced that it was considering giving banks the green light to finance mortgages under Egypt's new mortgage law. Approved last year, the law is awaiting implementation.
Amidst this movement, Cairo Housing and Development and Nasr City Housing and Development had mixed performance. Cairo Housing closed at LE3.70, down from a year- high of LE4.39 last month, and Nasr City closed at LE21.91, up from its year-low of LE17.25 last November. Orascom Construction Industries (OCI), however, had a tough week, with foreign selling pushing it down to a closing LE29.
Just less than a month after it announced its plan to sell its stake in Sub Saharan subsidiary Telecel, Orascom Telecom (OT) announced its race with two other bidders for Tunisia's second mobile phone licence. While the value of the bid was withheld, a Tunisian official said the winning bid would exceed $381 million; that being the highest bid at the original tender in July. OT is expected to call for a partner in the bidding, given its already-high leverage.
OT ended at LE13.7, while its sister company, MobiNil, closed at LE30.50. Market observers believe the two big caps will not breach this level and thus reflect good buys. The scene is much the same for Commercial International Bank (CIB), which closed at LE28.5. In fact, CIB gave interested investors an impetus to buy throughout the week with its announcement that it would be distributing a dividend of LE3.75 -- unchanged from last year -- due to be paid by April.
The banking sector as a whole had a relatively good week, with one of the nation's top five private banks, National Societe Generale Bank (NSGB) -- a leading sector player -- boasting better than expected results.
NSGB realised a 14 per cent increase in net profits in 2001, ending the year with a reported LE142.1 million. The results beat analysts expectations, which had projected net totals ranging between LE134 million and LE139 million. The bank -- 54.3 per cent owned by France's Societe General -- benefited from its aggressive policy of expanding lending despite the country's gloomy economic portrait. Its loans portfolio increased to LE6.68 billion -- a jump of more than 25 per cent. This policy was reflected in a 15.5 per cent rise in its net interest income, which came to LE203.7 million.
In a public statement last month, NSGB announced the planned expansion of its retail operations, including the introduction of a range of services -- such as car loans -- for employees of corporate clients. Such expansion involves adding 10 more branches to its existing 25 by year's end.
Following the same profit-making trend was Watani Bank (WB), which posted a six per cent gain in net profits in calendar 2001 to end the year at LE107.86 million. The week also witnessed the resumption of trading in Egypt's Alexandria Cement, after the company announced its stellar 2001 results. The company's net profits sky-rocketed from LE7.1 million in 2000 to LE113.3 million in 2001.
The surge emerged from non-operational income, including a capital gain from the sale of the firm's stake in Suez Cement last year to France's Ciments Français. French cement giant Lafarge has a controlling stake of about 80 per cent in Alexandria Cement. The Capital Market Authority (CMA) decided last month to ban the trading of the company's shares until the disclosure of its financial results.
Not the ideal week for traders and investors, but certainly a fraction more blood-stirring than recent weeks. The glimpses of rising prices and market momentum have jabbed some of the market lethargy in the side.
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