Market report

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Thin transactions dominated by retailers directed the market in Sunday's and Monday's trading sessions. While the stock market gained some momentum on Sunday, the first day of the trading week reversed the previous week's downward trend. The absence of foreign and Arab interest took its toll of the market on Monday, when it ended at 5169 points.

The CASE witnessed its worst ever trading week which ended 23 May. The CASE30 lost a total of 15.9 per cent during the five-day trading week. Market capitalisation retreated by LE39 billion. The decline came in the wake of a global restless mood triggered by fears that an increase in US interest rates might fuel global inflation. This coincided with a decline in oil and commodity prices. The Arab markets also maintained their downward trend in one of the longest correction movements seen in the region. Saudi Arabia's Tadawol index lost six per cent throughout the week. The Dubai Stock Exchange's accumulated loss since the beginning of the year was 53 per cent of its market capitalisation, while that of the Abu Dhabi Stock Exchange was 34 per cent. The decline in Arab and foreign markets has induced institutional investors to restructure their portfolios worldwide, by pulling out from certain markets, while pumping their investments into others.

In Egypt the institutions and foreign investors became net buyers last week, so as to benefit from the attractive low market prices. They generated a net equity inflow of LE1.06 billion for institutions, and LE737 million for foreigners.

Dozens of local retail investors gathered in front of the CASE headquarters during the week's trading days to give vent to their anger. In an attempt to allay their concerns, the Capital Market Authority launched a media campaign aimed at giving small investors simple tips on how to choose a reliable broker and suitable company in which to buy. The CMA also designated a phone number which provides answers to inquiries about stock market investments.

EFG-HERMES: As usual this was the heaviest- traded share with LE1.8billion worth of transactions. The company shouldered the largest loss in share value, which was estimated at 33 per cent when it closed at LE 30.87. It also faced accusations by shareholders that it has contributed to the market's downfall. The company had announced two months ago that it would re-buy 15 million of its shares to support its price, but never took the promised step. Its shares went into a free fall as a result. The situation was compounded further during this week when Citicorp sold 500,000 shares which it owned in the company, putting more pressure on EFG-Hermes and the market in general.

ORASCOM CONSTRUCTION INDUSTRIES (OCI): The regional construction and cement conglomerate posted an impressive 54.2 per cent increase in net profits during the first quarter of 2006 when it reached LE525 million. This is compared to LE340.5 million in the corresponding period in 2005. The quarter also saw important developments as OCI completed the acquisition of Van cement plant in Eastern Turkey in addition to finalising a $40 million worth contract with F L Smith to build and supply the needed equipment for a new cement production line in Libya, whose daily capacity is 5000 tonnes. OCI also ordered new cement bag manufacturing equipment to expand its production capacity in Egypt and Algeria, and launch new operations in Pakistan and Turkey. This will raise the conglomerate's total annual capacity to 560 million bags per year in 2008.

ORASCOM TELECOM (OT): The company signed a joint-venture with Intel Capital, the venture capital investment arm of Intel Corporation to create Orascom Telecom WIMAX Limited. The new company will be majority- owned by OT. It will work with the government and private sector to obtain suitable spectrum licenses for the deployment of WIMAX (Worldwide Interoperability for Microwave Access) services. WIMAX is a wireless networking technology which gives access to the Internet at faster speeds, at a distance that could extend up to 10 miles. This is much longer than what the current wireless technology known as Wi-fi allows.

OT has also been short-listed to bid for a majority stake -- which is more than 70 per cent -- of the Serbian Mobile operator Mobi63 which has two million subscribers. The Serbian authorities have placed the minimum bidding price at $977 million. They also stipulated that the bidding company would have a subscriber base of at least three million, in addition to a bottom line of around $610 million in 2005. Other international short-listed companies are Norway's Telinor, France Telecom and the UAE's Itisalat.

VODAFONE EGYPT: The mobile phone operator posted a 63 per cent increase in its net income during the fiscal year 2006, compared to the previous year. The company's net profit reached LE1.7 billion. The increase was fed by a 60 per cent rise in the number of subscribers from 4.1 million in March 2005, to 6.6 million in March 2006. The Egyptian cellular market had a total of some 13.6 million subscribers as of 31 March, 2006, resulting in a penetration rate of around 18.7 per cent.

Compiled by Sherine Abdel-Razek