9 - 15 May 2002
Issue No.585
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Al-Ahram Weekly Online 9 - 15 May 2002 Issue No.585 |
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Gaining altitude
It was not a breathtaking performance, but at least the market bucked its lengthy declining trend. Sherine Abdel-Razek reports
The very slight easing of tension in the region with Israeli troops withdrawing from Jenin was instantly reflected in better market performance this week. Most blue chips ended in the gainers' camp. The share of overall transactions taken by bonds was also smaller compared with previous weeks, indicating that investors are gaining confidence in equities. Equity transactions were particularly boosted by a deal to sell 42 per cent of Al-Masry Cement company for LE436 million. This deal alone cornered 28 per cent of overall market transactions in the week that ended 2 May.
Several big-hitters released their first quarter or full year results this week. The Arabian International Construction Group (AIC), one of the top three private construction companies, reported net losses of 9.4 million Egyptian pounds for the financial year 2001 ending March, compared with a net profit of LE4.4 million the previous year. The fall was the result of a sharp 74 per cent decline in revenues due to stagnation in the industry. Revenues plummeted from LE215 million in year 2000 to LE57 million this year. The company, which was established in 1987, works as a general building and civil works contractor. Besides being the main contractor for the Egyptian Ministry of Electricity, the company is active in utility, network, housing and tourist projects. It currently also has projects in Libya, Kuwait, Dubai, Uganda and Saudi Arabia.
The main market mover, the Egyptian Company for Mobile Services (MobiNil), had better reason to rejoice. It posted profits of LE83.4 million in the first quarter of the year 2002. This is, however, a decline of 7.5 per cent from the LE90.5 million reported for the corresponding period of the previous year. The company is Egypt's first mobile phone network operator. Its subscriber base also climbed five per cent in the quarter to reach 1.95 million customers.
Operating since May 1998, MobiNil is currently the largest wireless service provider in the Middle East. Its network covers over 93 per cent of Egypt's populated areas, and it has signed roaming agreements with over 75 international carriers.
Following the trend for shrinking profits was another popular stock, Commercial International Bank (CIB). It shouldered a 7.5 per cent net profit drop in the first quarter of 2002, which now stands at LE92 million.
CIB was established in 1975 as a joint venture between the National Bank of Egypt (NBE) and Chase Manhattan Bank which later withdrew. CIB is one of eight Egyptian companies with shares traded on international markets in the form of Global Depository Receipts.
Much of the market's activity was driven by foreigners, whose transactions accounted for 32 per cent of turnover. While this was mainly due to the buyout of Al- Masry Cement company, foreigners were net buyers during the week.
In other market news, Helwan Cement investors presented a complaint to the Capital Market Authority about the company's delay in publishing its results for 2001. The company has also failed to set a date for its general assembly to approve financial results and the dividend. Investors had high expectations for the dividend after the Arab-Swiss Engineering Company (ASEC) bought a majority of the company's shares last year.
The latest market gossip was good news for the stocks of Media Production City Company and Al-Ahram Beverages. Both capitalised on rumours of interested investors to end the week higher at LE9.80 and LE39.96 respectively.
The general economic picture was also brighter than it has been for some time. Good news came from the tourism industry, Egypt's main hard currency gainer. The ministry of tourism announced that Egypt hosted 90 per cent more tourists during the month of March than in the same period last year. But ministry officials pointed out that the Israeli incursion into the Palestinian territories last month caused some cancellations to reservations and the upcoming summer season is expected to be slow. While the number of tourists visiting Egypt in 2001 amounted to 4.65 million, the government aims to attract 9.5 million tourists a year by 2005.
Another fillip came from the European Union (EU), which signed an agreement to grant Egypt up to 351 million Euros ($317.4 million) for development projects in the next three years. An EU official was quoted by Reuters as saying that the amount spent during the period could be less, as disbursement depended on the speed at which financing deals for individual projects were signed and how quickly work was implemented. This is the second deal of its kind between Egypt and the EU. Under a similar programme in 1995-1999, the EU offered Egypt 615 million Euros for the period 1995-1999. The new agreement covers projects in trade and finance, with some money to be spent on vocational training. The programme comes a year after Egypt signed an association agreement with the EU, its main trade partner.
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