Market report

By Sherine Abdel-Razek

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The market had another turbulent week, ending 2 March, in what analysts describe as a continuation of the three-week-old correction. Overall the market was bearish, with many investors opting to sell, though the re-entry of investment funds as buyers, banking on short- term market improvements, saved a number of blue chips from further decline.

The market's main index, the CASE30, lost 0.9 per cent to end on 6,962 points. The overall value of transactions came in at LE5.35 billion compared to late January's average of LE8 billion.

Imminent IPOs are feeding the wait-and-see mood as investors hold out for news about new offerings that include several housing companies as well as the national cement company and MIDOR.

The minister of investment is currently working on the restructuring of a number of loss-making public companies in preparation for their sale. Around LE1.292 billion have so far been channelled towards restructuring state-owned companies affiliated to seven holding companies, of which sum the Holding Company for Textiles has cornered the lion's share, receiving LE467 million.

EFG-HERMES maintained its position as market leader in terms of the value of transactions with LE1.3 billion worth of its shares changing hands. It lost 6.7 per cent during the week to close at LE167. The week witnessed an important development when the Dubai International Financial Exchange (DIFX) admitted EFG-Hermes UAE, the first regional institution to join the exchange as a broker. The exchange now has eight authorised members. The others are Barclays Capital Securities, Credit Suisse Securities (Europe), Citigroup Global Markets, Deutsche Bank, HSBC, Morgan Stanley & Co International and UBS.

ABU QIR FERTILISERS (AQF) was able to buck overall trends on the back of prime ministerial approval for the export of 150,000 tonnes of fertilisers, including 105,000 tonnes of AQF produced urea. Given that international fertiliser prices are 150 per cent higher than local prices the move gives added value to the company. It also allows AQF access to foreign currency that can be used in updating plant and machinery. AQF shares reacted positively to the news by grasping LE5 to close at LE165.

AQF, which controls 70 per cent stake of local urea production, began exporting in 2003. At the end of 2003, though, the government restricted exports in order to ensure local demand was met.

ORASCOM TELECOM HOLDING finalised its purchase of a 19.3 per cent stake in Hutchison Telecom International Limited, operator of several Asian mobile networks, for $1.2 billion

OT is paying for the acquisition through the $2 billion syndicated loan announced last month. The five-year facility also allows Orascom Telecom Holding to re-finance its debt obligations and is structured flexibly enough to allow for future growth. OT had a turnover of LE226.91 million, rising 0.45 per cent to end the week on LE341.50.

COMMERCIAL INTERNATIONAL BANK (CIB) continued to ride on the buzz generated by American Ripplewood Group's acquisition of 20 per cent of its equity. CIB ended the week at LE71.5. Shareholders, meanwhile, await the outcome of the general assembly meeting that has been convened to approve a capital increase from the current LE1.5 billion to LE5 billion. If approved the increase will see CIB regain its position as Egypt's largest private sector bank as it knocks Société Générale from the top slot which it has occupied since acquiring Misr International Bank.

During the week CIB opened subscriptions for its second accumulated income mutual fund. Investment certificates are denominated at LE100.

EZZ STEEL REBARS had a week of good news. The company's extraordinary general assembly approved increasing its stake in Alexandria National Iron & Steel (ANSDK) from the current 29.5 per cent to 51 per cent. ANSDK is a major player in the domestic steel market and its 2005 results, released last week, showed a 72.2 per cent increase in net income to reach LE2.375 million.

EGYPTIAN POULTRY COMPANY (EPC) surprised the market, recording a 26.5 per cent increase to close at LE5 despite reports about the spread of avian flu. The government's decision to ban the sale of live poultry gave companies like EPC, which have slaughtering and refrigeration facilities, an advantage.