Market report

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The week ending on 19 January closed on a high. Weekly turnover came in at LE10.42 billion, showing increased interest in the market. Even bonds had a good week as LE743.97 million worth of treasury bills and corporate bonds changed hands. The bourse itself made the news when Cairo and Alexandria Stock Exchanges (CASE) signed a memorandum of understanding with Milan Stock Exchange-Borsa Italiana to cross list shares. The memorandum paves the way for cooperation over market regulation, investor education, training programmes, corporate governance, market surveillance, electronic platforms and statistics. CASE is currently the focus of a great deal of attention as it rides high on gains made throughout 2005. According to The Economist the Egyptian stock market registered a 125 per cent increase in dollar terms in the last 12 months, outperforming all other emerging markets, including Columbia and Saudi Arabia, which The Economist ranked second and third. The massive gains made in the past year have sparked concern that the bourse is overheating and shares are overvalued. Should such concerns prove true then a period of readjustment is likely, which could impact on the appeal of many soon-to-be floated shares.

MISR ALUMINUM: News about its pending privatisation has raised interest in its shares. Misr Aluminum recently submitted a listing application to CASE for a stock split resulting in its share price falling from LE10 to LE4. By increasing the number of shares issued to 125 million Misr Aluminum hopes to improve stock liquidity.

The Holding Company for Metallurgical Industries, owner of 92 per cent of Misr Aluminum, signalled its intention to float 17 per cent of the company, bringing the free float to 25 per cent. Details on the timing of the flotation have yet to be announced. Meanwhile, the Holding Company has chosen the National Bank of Egypt and CI Capital, a subsidiary of the Commercial International Bank as financial advisors and lead managers for the floatation process.

ORASCOM TELECOM HOLDING (OTH): News that the regional telecom giant's interim licence for its Iraqi GSM operation, Orascom Telecom Iraq Corporation-Iraqna, has been extended for a further six months till June, met with mixed reactions. OTH will then have to pay a renewal revenue sharing fee that will shave its gross revenues by 13 per cent. OTH will no longer, however, be required to pay the nominal licence fee on its original licence terms. Meanwhile, OTH will be bidding for a long-term licence in Iraq in a tender expected to take place before the end of 2006.

On a related note, Weather Investment, owned by OTH's Chairman Naguib Sawiris, is buying the 37.25 per cent it does not yet own of Italy's second biggest mobile operator Wind. Last May Sawiris shifted the ownership of 50 per cent, in addition to one golden share of OT, to Weather in a deal valued at LE27.5 billion.

ORASCOM HOTELS AND DEVELOPMENT: During a press conference the tourism sector's rising star announced news about future investment plans. OHD's chairman, Samih Sawiris, said OHD intends to develop resorts worldwide and was tapping into the airline business, and will soon be setting up a domestic Egyptian airline and charter carrier, Sun Air, with a partner. Sun Air will be 51 per cent owned by OHD, and will start operating in May or June, with two 75-passenger ATR planes serving destinations inside Egypt that it could also offer trips to nearby destinations such as Jordan.

OHD also intends to develop resorts in Yemen and Switzerland.

Under a deal with the French Club Med, OHD is setting up a new joint-venture in which it will hold a 75 per cent stake and Club Med 25 per cent. Its first project will be to develop a 50 villa resort complex on land adjacent to Club Med in Mauritius.

By developing resorts in Switzerland, Oman and the UAE OHD plans to increase the number of hotel rooms it manages from 4,600 to 10,000 by 2011.

TELECOM EGYPT: Last month's market star had a relatively quiet week -- no surprises and little movement. An announcement made by Minister of Communication and Information Technology Tareq Kamel did, however, bring some cheer to TE investors. Kamel said that the capacity for fixed telephone lines was now 13.12 million, and was on target to reach 14 million by June 2006.

Compiled by: Sherine Abdel-Razek