Al-Ahram Weekly | Economy | Down and despondent

		15 - 21 August 2002 Issue No. 599 Economy	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

Down and despondent
A weak economic outlook and a continuation of regional tension have kept interest in the market at all-time lows. Sherine Abdel-Razek reports

Another depressing market week has passed with worse-than-expected company results and slow business across the board. The seasonal summer lull and a fading of the excitement that followed last month's announcement of new trading rules -- amid an overall negative outlook -- have stripped the market of any mentionable changes.
Thin trading throughout the week affected blue chip stocks, for which demand retreated. MobiNil closed at LE29.49 and a single institutional investor was to thank for the large share purchase in Commercial International Bank. The bank's stocks retreated due to disappointing results it released last week of a 7.6 per cent fall in net profits in the first half of 2002.
On the macroeconomic level, the World Bank and the IMF moves are still making headlines. A World Bank official said last week that both the World Bank and the African Development Bank (AfDB) might approve the payment of $1 billion in quick-disbursing funds to Egypt in October or November instead of September as previously announced. The loans are part of the facilities agreed upon during Egypt's donor meeting held in Sharm El- Sheikh in February.
The World Bank official said the money would only be released with an IMF go- ahead. The World Bank and the AfDB are currently jointly negotiating their portion of the loan package with the Egyptian government.
Two weeks ago, the IMF said Egypt had not asked to take up its $500 million loan offer and that the country's economy was improving, boosted partly by a recovery in tourist numbers.
News on the privatisation front failed to give the market a boost, as watchers are disillusioned with announcements of company offerings that never come through. This time, the Ministry of Finance has said it will appoint a committee to review the financial standing of the Misr Hotels- Hilton (MHOT) Company in order to determine the group's debts owed to the government as a step towards the company's privatisation. The state-owned Holding Company for Housing, Tourism and Cinema, MHOT's mother company, announced its willingness, earlier this year, to sell 70.54 per cent of MHOT's shares to an investor or group of investors by November. Last year, Hilton International offered to purchase a controlling stake of Misr Hotels. However, the market might soon be encountering Egypt's biggest ever non-governmental bond offering. Egyptian Cement Company (a subsidiary of Orascom Construction Industries) is due to issue LE1 billion worth of bonds. The bonds will be issued in two categories, the first worth LE600 million, with a fixed interest rate of 13 per cent, and the second valued at LE 400 million, with a floating interest rate of two per cent over the CBE discount rate.
As for company news, the interim and quarter results of many companies came out flat like last year. The bottom line of HSBC Bank Egypt remained unchanged during the first half of financial year 2002. The bank reported net profits of LE32.8 million. HSBC Egypt's financial results were burdened by a 48 per cent rise in general and administrative expenses, which incorporate currency depreciation.
The pharmaceutical sector lost the popularity it gained during talks about giving the license of Viagra production to an Egyptian company. However, Cairo Pharmaceuticals and Chemical Industries (CPCI) released some good news. CPCI is seeking to expand its manufacturing facilities with the establishment of a new plant in the manufacturing city of Badr. The company reported a 7.33 per cent increase in its net profits for the first half of year 2001/2002, reaching LE16.35 million, compared to LE15.4 million for the corresponding period the year before.

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