Al-Ahram Weekly | Economy

		1 - 7 August 2002 Issue No. 597 Economy	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

A slow summer
Investors adopt a "wait-and-see" attitude to the government's new market initiatives as key stocks lose ground. Sherine Abdel-Razek reports

Summer lull, regional political unrest and profit taking sessions, a combination of factors that would depress any market. Cairo's stock exchange is no exception.
While the bourse usually sees a retreat in its turnover during the summer months, this year the decline has been steeper than ever. The week ending 27 July witnessed LE203.8 million worth of securities changing hands, broadly in line with the summers of 2001 and 2000. Even bond transactions, always a safe haven during periods of economic uncertainty, amounted to a meagre LE33.4 million during the holiday shortened week.
The expected positive impact of lifting the ceiling on share price movements has not yet materialised. Indeed, investors still seem to be cautious as they adopt a "wait-and-see" approach to the government's latest incentives.
Meanwhile, most blue chips lost ground in profit taking sessions following last week's rally. The stock which made the headlines was MobiNil, which reported a 36 per cent drop in second-quarter net profit. It posted a second-quarter profit of LE70.2 million. While the figure was lower than market expectations, overall results were generally in line with expectations.

MobiNil share price movement

President and Chief Executive Osman Sultan said that there had been steady growth in postpaid subscribers in the first half of the year; cost cutting also helped margins. Postpaid users that pay monthly bills rather than buying prepaid cards, tend to generate more recurring revenue. Additionally, MobiNil said it had taken LE44 million in foreign exchange charges in its second-quarter results. The charges, which contributed to the 36 per cent fall in net profit over the same period a year ago, were partly to hedge against its dollar-denominated debts and partly linked to the recent rise in the euro against the dollar, the firm said. MobiNil ended the week down at LE30.
Commercial International Bank (CIB) was also down, at LE28.11, with investors still waiting for its financial statements. Orascom Telecom (OT) moved higher on rumours that the firm was about to finalise a capital increase announced in May. OT shares closed at LE10.36
Market reaction to statements on the Egyptian economy by a senior International Monetary Fund (IMF) official was muted. The executive director of the IMF, Abdel-Shakour Shaalan, said that the Egyptian government's commitment to a flexible exchange rate and gains in the country's tourism and non- petrochemical industries are improving the economy. According to Shaalan, who is Egyptian and represents the Arab world at the IMF's executive board, there will be a budget deficit of four per cent. However, he added that Egyptian exports have become stronger and imports reduced. That has been aided by Egypt's flexible exchange rate policy, pursued over the past year.
Shaalan also revealed that Egypt has not accepted an IMF-offered $500 million loan in return for economic reforms. He dismissed suggestions that Egypt had declined the quick-disbursement loan because it didn't want to adhere to IMF conditions. The conditions included making the exchange rate mechanism even more flexible.
Foreigner sell and buy orders in the market were almost at parity this week, with buys at LE16.6 million and sell orders at LE17.8 million.

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