Tumbling records

Sherine Abdel-Razek reports on a week in which the market broke the 6,000 point barrier

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Last week the CASE30 index rose above 6,000 points for the first time ever following three consecutive days of more than LE1 billion worth of transactions.

Increasing interest from international -- especially Arab investment funds was one of the factors behind the boom in transactions, along with the posting of strong third quarter financial results. High earnings lower the price/earning ratio, making the Cairo and Alexandria Stock Exchange more attractive than other regional capital markets.

The announcement of the date of Telecom Egypt's offering further stirred enthusiasm in the market, with TE's long awaited issue now due to take place by the end of November. The offering is expected to cover a maximum of 20 per cent of TE's equity and will include a public issue as well as private placement. Some shares will be listed as GDRs on the London Stock Exchange, and one per cent of the issue will be reserved for employees.

A close look at the market shows that trading was up in all sectors during the week ending 10 November.

In telecoms the largest blue chip company, Orascom Telecom (OT), rose by 5.88 to close the week at LE619.35, its highest yet. The hike came on the back of Wind Telecom's impressive results and a proposed stock split. Wind is the Italian telecom company acquired early in summer by a consortium led by OT's Chairman Naguib Sawiris. There are plans to merge the two companies by early 2006.

OT's General Assembly, which met on 1 November, approved a 2:1 stock split for local shares. It also agreed to modifications of OT's dividend distribution policy, allowing flexible dividend distribution on a quarterly basis depending on the company's results, from the beginning of financial year 2006.

The Egyptian Company For Mobile Services -- MobiNil -- was also the focus of interest. MobiNil announced its nine-month results ending September 2005 during which net income soared 65 per cent to LE1.097 billion. The company benefited from a widening of its subscriber base to 6.5 million. MobiNil currently has a 54.9 per cent market share with its only rival, Vodafone Egypt, holding the balance.

Positive sentiments reigned in the banking sector following news that the European Union has offered 13 million euros (LE88 million) to restructure Egypt's public banks.

The upward pressure on Al-Watany Bank of Egypt's shares continued from last week as they increased by 8.54 per cent to end at LE26.40. In addition to impressive third quarter results announced last week interest in the bank was fuelled by news that it plans to sell its 33.68 per cent stake in Nile Cotton Ginning Company. Expansion plans -- including news that it will allocate LE100 to LE500 million to acquire one of the small private banks in Egypt during 2006 -- gave investors further cause for celebration.

Egypt's largest investment bank, EFG-Hermes Holding Company, is planning a new employee benefit scheme. The company's general assembly, scheduled for 23 November, will discuss the transfer of treasury stocks worth two per cent of the company's total capital to EFG- Hermes' Employees' Trust, beginning with the current fiscal year and continuing for five years.

The textile sector also took its share of the limelight. Arab Cotton Ginning increased by 0.5 per cent during the week to close at LE18.60. It announced that it would hold a general assembly soon in order to finalise long-term plans. The company's first quarter results showed an improvement, with a net loss of LE1.19 million compared to LE3.06 million over the comparable period last year. The company attributed the reduction to renovation and maintenance activities at its ginning facility.

Oriental Weavers maintained its position as the sector's rising star closing at LE100.97 on the back of its announcement of restructuring plans. Falling oil prices, a major expenditure item, also helped.

The construction sector also performed well. According to Prime Securities construction companies have consolidated their position following recent market studies focussing on high growth opportunities in the sector. Moreover, Gulf investors have started to show greater interest in investing in the sector, leading to an average 18-22 per cent increase in stocks across the board.

The Ministry of Investment plans to divest all state-owned holdings in the sector by June 2006 and the Holding Company for Construction and Development recently announced plans to sell its 38.2 per cent stake in Nasr City for Housing and Development.

Orascom Construction Industries (OCI) launched a $300 million five-year bond on the euro loan market. It has established a wholly- owned subsidiary in the British Virgin Islands to act as its borrowing arm. The company set up the subsidiary in order to circumvent local regulations restricting borrowing to no more than 30 per cent of total capital.