25 April - 1 May 2002
Issue No.583
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Al-Ahram Weekly Online 25 April - 1 May 2002 Issue No.583 |
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| Published in Cairo by AL-AHRAM established in 1875 | Current issue | Previous issue | Site map | ||
No news is bad news
Until better news arrives to perk up the market, share prices are expected to continue as they were: going down. Sherine Abdel-Razek reports
It was another week of losses. The week ending 18 April witnessed more companies losing ground, with the regional political tensions and the domestic economic slowdown continuing to undermine performance.
The net value of transactions came to LE433.8 million, LE284 million of which was in bonds. Foreigners continued to sell, to the tune of LE32.8 million, their sells outstripping their buys by over 250 per cent. Their buys stand at a lowly LE12.9 million.
Analysts predict that foreigners will remain skittish until the arrival of better economic news. They also believe that funds which look first at the macro-economic picture are bearish, while those that assess each company on its merits are still holding their investment positions.
Stocks on the Cairo and Alexandria Stock Exchanges (CASE) continued to slide, ending the trading week in the red. Most of the leading shares closed in the losers' camp. Commercial International Bank, which captured the biggest slice of market transactions (LE26.4 million-worth of its shares changed hands), lost nine per cent of its market capitalisation, to close at LE28.83 after it distributed its dividend. Rumours continue of a possible Gulf investor showing interest in the bank, but in the absence of concrete news they failed to buoy the bank's share price. Al-Watani Bank of Egypt also faltered, losing LE3.47 to close at LE18.34. It distributed an LE3 dividend through the week.
Telecom shares also lost ground, as they rely heavily on the foreign investors who are fleeing the market in droves amid news of regional tension. The regional mobile operator, Orascom Telecom (OT), closed at LE11.71 while the local GSM provider, MobiNil, ended the week at LE28.43 amid a heavy selling spree led by an Arab fund.
Companies that posted financial results did not escape the general economic dismay. Of seven companies registering financial results with the CMA during the week, only one, Medical Professions, recorded a profit. International Electronics, whose founder and chairman is the business mogul Ahmed Bahgat, shouldered the heaviest loss. The company witnessed a 450 per cent increase in its net losses which stood at LE222 million for 2001, compared with LE49 million the previous year. International Electronics' main business is producing television sets.
The Alexandria Cement saga continues. Shareholders with more than five percent ownership of Alexandria Cement have asked the Capital Market Authority (CMA) to suspend all decisions taken during the firm's annual general meeting (AGM) on 4 April 2002. Alexandria Limited, another company, had offered to buy Alexandria Cement's shares. Alexandria Cement's general assembly approved Alexandria Limited's offer price in principle, and Alexandria Cement's general assembly also opted not to distribute dividends. The larger shareholders of Alexandria Cement now feel, however, that the offer price is below their company's true worth. But analysts say that if the CMA suspends the decisions taken at the general meeting, the financial statements of the company would not then reflect the company's financial position, particularly as the decision not to distribute dividends would then be void.
Accordingly, shareholders would be unable to make informed decisions about buying and selling the stock. As a result, the CMA has decided to extend the due date of the offer to buy Alexandria Cement's shares until it rules on the matter.
Some brighter macro-economic news may be in sight. Egypt has now begun to reap the fruits of the February donors' meeting in Sharm El-Sheikh. Last week it concluded agreements with the Arab Monetary Fund (AMF) for a loan of about $118 million and with the World Bank for a separate $50 million loan. While the AMF funds will be channelled to monetary policy and banking supervision reforms, the World Bank's loan is to be allocated for higher education. Explaining the conditions attached to the loan, the AMF said the reforms that Egypt had to undertake "related to the conduct of monetary policy and monetary management, and also the area of banking supervision."
Egypt had appealed at a so-called "consultative group meeting" of international donors in February for help after its economy was hit by a slump in tourism following last September's attacks on the United States.
Donors had pledged about $2.1 billion for quick disbursal for Egypt this year to meet its most urgent needs.
The features of the new budget were also revealed. Finance Minister Medhat Hassanein announced that Egypt's Gross Domestic Product (GDP) was expected to reach LE405 billion for the fiscal year 2002-2003. The net budget deficit was expected to be LE17.2 billion, which represents 4.2 per cent of the country's GDP.
Investments are expected to reach LE19 billion, 26 per cent higher than last year. The government also predicts that it will collect LE72 billion in sovereign resources such as taxes and customs tariffs, against LE69 billion last year.
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