Market report

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Analysts believe that the ability of the market to come out of its three week-long plunge all depends on its reaction to a series of current and future events. The market lost 3.6 per cent through the week ending on 19 June, with the CASE30 index closing at 10,308 points amid a profit- taking spree which shaved the market's big caps off significant profits. The overall market capitalisation decreased by 2.4 per cent to reach LE844.6 billion.

The international rating agency Moody's lowered its outlook for Egypt's foreign currency bonds to negative from stable, due to rising inflation. The agency said that despite the increase in growth rate and the state's commitment to economic reform, "it considers that the risks to the government's creditworthiness have tilted to the downside, given the high and accelerating rate of inflation in a context of pronounced social and fiscal vulnerabilities."

Another important development is the close of the bidding process for Banque Du Caire on Tuesday, and the state saying it will choose the winning bid in an auction on Wednesday. Until the newspaper went to press, the results of the auction were not announced. The list of competing banks for the 50-67 per cent stake includes the Arab Bank group, Saudi SAMBA, Mashreq Bank of the UAE, the National Bank of Greece and Standard Chartered (UK).

In a move aimed at boosting the daily trading volume on the local stock exchange, CASE Chairman Maged Shawqi announced that a new trading system supplied by Nasdaq OMX will come into force in July 2008. The system is believed to be able to accommodate up to LE3 billion in transactions every day, in addition to paving the way for Egypt's derivatives market to be launched in the second half of 2009.

ORASCOM TELECOM HOLDING (OTH) cancelled 61.9 million treasury shares which it bought back in the last four months. Thus, OTH's capital decreased from LE1.09 billion to LE1.028 billion. The move was followed by two international investment banks upgrading their outlook for the company.

Goldman Sachs upgraded its recommendations on OTH from "neutral" to "buy", and it raised its price target on the stocks to LE100 from LE82. It also said that OTH, which operates in Algeria, Bangladesh, Tunisia, Pakistan and Zimbabwe could be a good acquisition target for other telecom companies from the Gulf, India and Europe looking for African and Asian exposure.

Moreover, Merrill Lynch raised its price objective to LE80 from LE73.16 to reflect the company's recent share buyback. Merrill Lynch said the share price of Orascom, whose stock closed at LE78.79 on 19 June, was supported by its ability to buy back shares and prospects that the group was the subject of a friendly take-over. Merrill Lynch, however, highlighted some future problems such as expected future competition in Algeria.

TALAAT MUSTAFA GROUP (TMG) sent a release to CASE highlighting that its sales so far amounted to LE6 billion, and are expected to reach LE12.5 billion by the end of the current year. In addition, the release noted that it expects LE6 billion in earnings over the next three years.

TMG is considering listing its shares on the London Stock Exchange in the form of GDRs, a move which the global financial services group UBS is advising it on.

ORASCOM DEVELOPMENT HOLDING (ODH) last week launched a new luxury real estate complex in Fayoum under the name Byoum. The project located on Lake Qaroun, will be built over 103 feddans and includes 142 villas, a five-star hotel, a commercial centre and a marina. It will use the governorate's reputation as King Farouk's favourite hunting ground to include a hunting area and other outdoor activities.

In related news, the Listing Committee at the CASE approved OHD's capital increase to LE1.109 billion from LE1.086 billion, through issuing over 4.7 million shares at a nominal value of LE5 per share.

NAEEM HOLDING, the financial services company, said it started the necessary procedures to establish a securities brokerage company in Oman, and is expected to be done within five months. Moreover, it decided to raise its stake in its Saudi brokerage subsidiary from 18 to 50 per cent.

In a news conference last week, the company also revealed plans to establish an asset management company and a real estate investment fund in Bahrain worth around a billion Saudi riyals in capital. It will be investing in the Gulf region, generally, and Saudi Arabia, specifically.

Naeem Holding will start an LE100 million fund to buy stakes in firms planning public listings in the new small- and medium-sized companies' stock exchange, Nilex. Responding to CASE inquires, Naeem Holding sent a release confirming press reports about a partnership between it and a Kuwaiti real estate company to establish a mortgage finance firm in Egypt with a paid-in capital of LE1 billion. Naeem Holding would own a 50 per cent stake in the new company.

Compiled by Sherine Abdel-Razek