Market report

By Sherine Abdel-Razek

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The market this week made a good start by capitalising on the bullish mood that characterised transactions during the last two days of the previous trading week that ended 29 June.

Investors are still cautious however, and are holding back their investments. This was reflected in the thin value of average daily transactions that stood at around 400-500 million. This stands in contrast to the transactions that reached three times this level, during the market's highs in last December and January.

Analysts meanwhile are optimistic concerning the market's trends in the short term, based on a number of microeconomic supporting news. EFG Hermes started buying back treasury stocks. An uplifting impact as well resulted from news of plans by Orascom Telecom Holding, the market's largest company in term of capitalisation, to increase its stake in MobiNil. The positive trend was further consolidated by positive macroeconomic news. The balance of payments recorded a $2.5 billion surplus in the first half of 2005/200, while the value of commodities exports increased by 35 per cent to reach $8.6 billion.

PIRAEUS BANK: The bank's largest shareholder, Piraeus Greece, increased its stake in Piraeus Egypt to 94 per cent by buying the shares owned by a Libyan investment company. The deal included 17.664 million shares, at LE 30.50 per share. On a related note Piraeus Egypt has announced that it will apply for a brokerage company license, in addition to plans to establish a new financial leasing company.

EGYPTIAN AMERICAN BANK (EAB): The extraordinary general assemblies of both EAB and Calyon Egypt approved the merger between the two banks. The two will form one entity under the name of Credit Agricole Bank. The latter will have assets of LE3.38 billion to be distributed through 64.8 million shares, at a share value of LE51.7. According to the merger agreement, the shareholders in EAB are entitled to have 3.65 shares in the new entity, for every share that they own in EAB.

COMMERCIAL INTERNATIONAL BANK: The bank's extraordinary general assembly meeting approved a LE650 million increase in its paid-in and issued capital, to reach LE1.95 billion. The increase will be financed through the bank's reserves, by distributing one new free share, for each two existing shares.

The meeting gave the green light to CIB's managers and employees to own stocks in the bank's capital. It is worth mentioning that the bank's previous GAM approved increasing the bank's authorised capital to LE5 billions. CIB posted a net profit of LE610 million for the fiscal year 2005. This is a 20.6 increase from LE505 million in the previous fiscal year.

ORASCOM TELECOM HOLDINGS expressed an interest in increasing its stake in its affiliate, the Egyptian Company for Mobile Services (MobiNil) by 3.5 per cent. OTH already owns 16.6 per cent in MobiNil, in addition to 28.75 per cent in MobiNil Holding. The latter owns 51 per cent in MobiNil. The stake is equivalent to LE400 million. The other major shareholder in MobiNil is France Telecom's mobile arm, Orange.

EASTERN COMPANY: Egypt's state cigarette monopoly raised the price of its best selling brand Cleopatra Golden King, by 1.25 per cent to LE2.25 a pack. The brand accounted for 59 per cent of EC's total sales in 2005. A note released by EFG on the price increase expected a slow-down in cigarette consumption growth, down to 1.5 per cent as a short- term reaction to price rises.

"The speed and extent of the price rise in an environment of rising costs but stable currency, tempts us to believe that cigarette price controls have become less strict than before. This could be a first step towards a more liberal pricing policy," EFG said. It raised the fair value of company shares to LE345, which is 15 per cent higher than its current level.

DELTA INTERNATIONAL BANK (DIB): Nile Strategic Company bought 80 per cent of the bank for LE37 per share. The company which was formed by the Bahrain-based United National Bank to acquire majority stakes in Egyptian banks also plans to buy the remaining 20 per cent from the stock market. The share value of DIB at the end of Thursday transactions reached LE33.