Market report

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The market's fall saga continued for another week amid much pessimism, shrouding not only the local scene but also regional and international markets as rescue packages failed to regain investor confidence. Investors believe the negative outlook for the economy is stripping the market of its appeal, despite the fact that shares dropped to exceptionally attractive levels.

The government's moves to prepare the economy for the repercussions of the global meltdown that have yet to come, and to lift the ceiling on the number of shares to be bought back by companies to support prices, did not offset growing concerns.

CASE30 ended Monday at 5,732 points, compared to 7,541 on 14 September, the day Lehman Brothers went bankrupt. The average value of daily transactions hovers around LE400 million, compared to LE1.5 to LE2.5 billion before the crisis struck.

News on the macroeconomic front added to the doom and gloom. Egypt's Suez Canal revenues fell by almost seven per cent in September 2008 to $469.6 million, compared to $504.5 million in August 2008, but up 16.3 per cent compared to its level a year ago.

EL-SEWEDY CABLES: Egypt's largest cable-producing company launched a wind energy group after acquiring a 30 per cent stake in Spanish wind energy equipment manufacturer Torres Olvega for 40 million euros. The company retained the option to buy out the remainder by March 2011. The new company, Sewedy Wind Energy Group, will be making products required to build wind farms such as turbines, blades and towers, and is expected to achieve sales of 434.6 million euros by 2011. A statement issued by the company noted that El-Sewedy was entering the wind sector in line with Egyptian government plans to generate 20 per cent of Egypt's energy needs from renewable resources by 2020. "Wind power, which is particularly well-suited to Egypt's climate and terrain, is expected to constitute a significant percentage of the target figure," the statement said.

EGYPT KUWAIT HOLDING: The company is buying back up to five million of its shares -- equivalent to 0.7 per cent of its equity -- between 2 November this year and 30 April 2009. This measure is designed "to maintain the stability of the share's market price at times of unjustified declines," according to a company statement. Calculated using Sunday's price levels, the day the company announced the plan, the overall value of the scheme is estimated at $9 million, and will be financed through the company's own resources without resorting to loans. According to Reuters Shares in Egypt Kuwait, which is the investment arm of the Kuwaiti Al-Kharafi group in Egypt, fell from a peak of $4.13 in March to a year-low of $1 on 7 October. The company's activities cover fertilisers, oil and gas, building materials and insurance.

ORASCOM CONSTRUCTION INDUSTRIES (OCI): The leading construction group has finalised a deal to acquire a syndicated loan of $736.5 million. The five-year loan is divided over two equal tranches and will be used in financing future company investments. The first tranche of the loan is a medium- term loan, while the second is a revolving credit facility, a loan that is renewed as it is repaid and is thus used repeatedly. The company's shares have been shouldering heavy losses to reach LE246.9 on Monday, compared to the LE440 target price that Credit Suisse set for the stock in September. The company bought back 2.5 million shares (including global depository receipts, or GDRs) through its buy-back programme announced 18 September and will last for a period of six to nine months.

THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): Egypt's largest mobile network operator said its third-generation network is not generating profits and that it would not have bought a 3G licence if the deal had not included an extension of its 2G licence. About 200,000 of MobiNil's customers currently use the 3G network. The company is trying to compensate for this by tapping into new activities. MobiNil and BNP Paribas have requested that the Central Bank of Egypt and the National Telecommunication Regulatory Authority (NTRA) grant permission to offer mobile banking services, to check balances and make payments via a mobile device, to MobiNil's subscribers. On another front the company, together with Vodafone Egypt and Etisalat Misr, has refused NTRA's suggestion that mobile operators should compensate subscribers in case of a network breakdown. The companies said network failures are mainly due to problems in Telecom Egypt's infrastructure, not the mobile operators' inefficiency in operating the infrastructure.

Compiled by Sherine Abdel-Razek