Market report

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The market gained some ground in the week ending 23 February following the previous week's decline. The CASE30 gained four per cent to end at 7026 in a week in which overall market transactions came in at LE8.3 billion. The increase was fed by Arab and international investors seeking to take advantage of last week's fall in prices which left shares looking increasingly attractive.

EFG Hermes, Egypt's largest investment bank, reports that the market has fallen by 14 per cent since early February and described the decline as a healthy correction following December and January's "stellar performance" which pushed its wide range index up by 42 per cent. The recent slide in prices is attributed to an increase in short-term investors, and to its own and OCI's current capital raising exercises which have tempted investors to liquidate their existing holdings so as to buy into the two companies.

EFG expects that in the medium term favourable economic conditions, combined with Western institutions' growing interest in emerging markets and the GCC's appetite for periphery markets will lead to a longer term rally in the next six months.

Economic indicators released during the week helped boost market performance. GDP recorded a six per cent growth rate during the second quarter of 2005/2006 to reach LE293.8 billion. The revival came on the back of an unprecedented 52 per cent increase in gas production and 12 per cent growth in the construction sector.

ORASCOM TELECOM said in a press release that it had signed an initial loan agreement with an alliance of four international banks -- ABN Amro, Citigroup, Credit Suisse and Deutsche Bank -- for a five-year loan valued at $2 billion. The loan is expected to finance its acquisition of 19.3 per cent of Hong Kong-based Hutchison Telecommunications International Limited. Meanwhile, Weather, which owns 50 per cent plus one golden share in OT, issued bonds worth euro 825 million exchangeable for OT shares.

MISR ALUMINUM COMPANY: The long- promised floatation of MA is going forward with a 17 per cent stake in the company being offered. The offer will come in two stages: the first will comprise 8.75 million shares, around seven per cent of the total, priced at LE54 and with a minimum order size of 100 shares and a maximum of 5,000. Brokerage companies will begin receiving orders from 26 February and continue for a period of 30 days. If fully subscribed, however, they could close their books after 11 days.

The second stage will include 10 per cent of the company sold through a private placement with a minimum order size of 50,000 shares and a maximum of 500,000. Shares will have a minimum price of LE 54 with no price ceiling. The final price will be determined by a weighted average of the bids.

Through Egyptalum, MA enjoys a monopoly of primary aluminium production in Egypt. Egyptalum is the only local brand recognised by the London Metal Exchange, and its product complies with international standards. The company was established in 1976 and was initially owned in its entirety by the Holding Company for Metallurgical Industries. In 1998 a 7.8 per cent stake of the company was sold to the public through an IPO.

HC Securities expects the company's sales to increase to LE3.1 billion in 2006, up from LE1.5 billion last year, the growth largely accounted for by increases in global aluminium prices which have risen by more than $500 in the last two months to reach $2,200 per tonne.

MA shares ended the week in the black at LE59 and brokerage companies have set their fair value between LE64 and LE70.

TELECOM EGYPT recorded a seven per cent gain fuelled by developments related to its bid for Egypt's third mobile network. TE said that it is currently in negotiations with regional and international operators to set up a consortium to bid for the license, with the stipulation that TE will assume the majority of the consortium equity following the sale of its 25 per cent stake in Vodafone Egypt, a condition for it to be able to bid for a competing network. Other positive news came from Algeria where the fixed line network Lakom, jointly owned by TE and OT, began operations last week . Lakom offers a wide range of telecommunication services covering the Algerian capital and five other cities.

EFG-HERMES: The first tranche of the company's new share issue, covering 16 million shares to be privately placed at LE115 per share, in addition to a one dollar issuing fee, was fully subscribed. The capital increase will fund EFG- Hermes' recent acquisition of a 20 per cent stake in Lebanon's Audi Bank. The second tranche -- the date of which has yet to be fixed -- involves a 2:1 rights issue, with 194 million new shares at a par value of LE5.

AL EZZ STEEL REBARS topped the list of the week's gainers registering a 24.47 per cent increase in its share value to close at LE97.16. Al Ezz had earlier announced a share swap with Alexandria National Iron and Steel Company, raising its stake in the latter from 21 to 51 per cent. The two companies together control 60 per cent of the local market, leaving them open to accusations of monopolistic practices.