14 - 20 March 2002
Issue No.577
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Al-Ahram Weekly Online 14 - 20 March 2002 Issue No.577 |
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Flutters of optimism
Positive sentiments can be felt in the market, even though the government is doing little to help. Sherine Abdel-Razek reports
It may not have been strongly reflected in increased transactions, or in breath- catching stock performance, but traders certainly felt it: the winds of optimism are blowing through the market at last.
This is no thanks to the government. None of the hoped-for changes to macro-economic policy have yet occurred. There is, though, some hope for a positive economic outcome to President Hosni Mubarak's visit to the United States, which may explain some of the week's market buoyancy. Investors hope that the government will try to invigorate the economy by introducing policy change after the meetings.
The government also has to decide whether or not it will request a loan from the International Monetary Fund. The IMF announced last week that it is awaiting Egypt's decision.
Egypt needs the money to cover its budget deficit which is expected to stand at 2.7 per cent for the year 2001- 2002.
But what has really revived the market is a crop of good news from the market's main movers.
MobiNil has benefited from a global improvement in telecommunication stocks, with the NASDAQ gaining ground by the middle of the week. The company had announced net profits worth LE336.8 million for the year ended 31 December 2001, an 18 per cent increase in the corresponding figure for the previous year. Its shares closed the week ending 7 March at LE33.46.
MobiNil's parent company, Orascom Telecom (OT), also had cause to celebrate. OT won a Tunisian GSM telephone licence with an offer of $454 million.
A statement by the Tunisian telecommunications ministry noted that Orascom will pay all its fee in dollars, in two tranches, with the first tranche of $227 million paid upon the signing of the licence contract and the second tranche of the same amount paid before the end of 2002.
The company did not reveal its sources of finance for the deal. Orascom outbid the other two contenders, Spain's Telefonica Moviles and Kuwait's National Mobile Telecommunications Company. OT shares reacted positively to the news to close at LE13.99.
Alexandria Cement is still making headlines. Transactions of the company's shares had been suspended by the market authority until the release of its annual report. Once that moratorium was terminated on the release of better- than-expected 2001 results, Alexandria Cement was rewarded for its forbearance. Alexandria Development Limited increased its offer bid for all Alexandria Cement's remaining free-float shares (about 20 per cent of its equity), to 30 pounds per share -- a steep increase from its February bid of LE19.50 pounds. French cement giant Lafarge has a controlling stake of about 80 per cent in Alexandria Cement. Another popular stock was Commercial International Bank (CIB), the main player in the well-performing bank sector. The sector has become investors' favourite thanks to a string of solid banking results that defied a sluggish economy. Shares in CIB, which posted a 4.4 per cent rise in net profit last month, ended at LE30.34.
Misr International Bank (MIB) also weathered the gloomy economic atmosphere with a two per cent rise in 2001 net profits to LE209.1 million.
Another company announcing its results in the week was Al-Ahram Beverages Company (ABC), Egypt's sole wine producer. ABC posted a drop in 2001 net profits, which reached only LE92.2 million compared to 112.9 million achieved the previous year.
ABC had been hit by the slowdown in the Egyptian tourism sector that began with the second Intifada. The events of 11 September pushed the sector into the doldrums. "Like all Egyptian companies, ABC was challenged by the events of 2001," ABC's Executive Chairman Ahmed Zayat was quoted as saying.
ABC's share price did flutter a little during the week amid speculation about possible investor interest in the firm but a company spokesperson later denied the rumour.
On a more positive note, the company's sales revenues since the Intifada rose by 21 per cent to 425 million. This rise was driven by a distribution agreement in August with the Saudi Dairy & Food Stuff Company (SADEFCO) to sell drinks in the Gulf. The agreement led to a 26 per cent increase in the volume of non-alcoholic malt beverage sold.
ABC's spirit sales also rose after it acquired the El-Gouna Beverages Company last year. Interest on the loan the company took out to finance this acquisition was a large reason behind ABC's profit fall.
Awaiting the announcement of its 2001 results, Orascom Construction Industries was also in the limelight. Egypt's leading construction group said it had secured $55.5 million worth of loans to finance expansion in the Middle East and North Africa.
The loans include a $25 million facility granted by the International Finance Corporation (IFC) to be repaid by 2010 with a three-year grace period. The rest will be raised through a syndicated loan from three international banks led by Citibank. The syndicated loan is due for repayment by 2008. The company's shares closed at LE37.25.
Overall market turnover was worth LE390 million, 68 per cent of which was in bonds. Foreigner transactions accounted for only six per cent of the market with sales exceeding buys.
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