Al-Ahram Weekly | Economy | Dejected again

		8 - 14 August 2002 Issue No. 598 Economy	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

Dejected again
Regional unrest and a fall in global equity trading have weighed down heavily on the local market. Sherine Abdel-Razek reports

As tension in the region escalates, investors' perception of the risk involved in investing in its markets has risen to unprecedented levels -- a fact demonstrated by the obvious retreat in foreign investment in the Egyptian market.
Meanwhile, the setback in the US economy, accompanied by a steep decline in the performance of corporate America, has depressed markets worldwide. According to analysts, the last two weeks witnessed scores of American investment funds selling their overseas investments to cover the demands of their American customers who, panicked by the free fall in the equity markets, wanted to redeem their investments.
Egypt's already ailing market also caught the global equity market decline bug. The week ending 1 August witnessed thin transactions, with an overall turnover of LE250.3 million.

Most of the blue chips ended in the negative and the percentage of losers outpaced gainers throughout the week.
As expected, foreigners were net sellers, their selling activities cornering 30 per cent of overall market transactions compared to 27 per cent of buying orders.
Despite apparent investor relief over Orascom Telecom's (OT) announcement of net profits worth LE3.10 million for the first quarter of 2002, transactions on the share were still subdued under the effect of a summer lull. OT ended lower at LE9.91 on a turnover worth EGP3.25 million.
In the banking sector, Commercial International Bank (CIB) has announced its first half results of 2002. The private bank's net profit was LE178.9 million, 7.6 per cent lower than the LE193.6 million reported for the same period last year. The drop came following a 35 per cent increase in provisions -- worth LE137.1 million -- charged during the period.
The National Bank of Egypt's (NBE) expressed interest to increase its participation in the bank's capital by 400,000 shares has led it to buy a further LE13.344 million worth of CIB shares from the market. CIB's stock dipped 0.53 per cent to LE27.96 this week.
National Societe Generale Bank, a private bank, reported a 7.6 per cent rise in net profit for the first half of 2002 to LE75.37 million, in line with analysts' expectations. The bank helped drive earnings higher by boosting net interest income and fees, but provisions fell, bucking a trend in the sector to boost provisioning amid an economic slowdown.
The bank, which is 54.3 per cent owned by France's Societe Generale, reported LE70.03 million in net profit for the first half of 2001.
Most banks have seen non- performing loans rise in recent months and analysts have expected provisions across the sector to head higher as a result. NSGB has been expanding its retail base, alongside other private sector banks, in a bid to grab a bigger share of the retail market.
Eastern Tobacco was one of the week's most popular stocks as it received approval from the government to introduce intermediate tax brackets on different local cigarette brands, allowing the company to increase its prices without having to pay higher taxes. However the cigarette monopoly did not benefit from this, as there was limited buying activity on the stock, which ended the week at LE40.04.
On the macro level, steps were announced to push forward the EU association agreement concluded last year and a new committee has been created to deal with implementation. The committee includes ministers whose role is to undertake the necessary modernisation steps in their fields in order to meet the required criteria of the agreement. A targeted budget of LE1.40 billion will be channeled to different industries and sectors, with the bulk earmarked for spinning and weaving, and some for the nutrition and leather industries.
By pumping in much-needed European expertise and funds, it is hoped the treaty will induce a boost in Egyptian industries.
The EU is Egypt's biggest trading partner, as 40 per cent of Egypt's foreign trade is with the EU countries.

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