Market report

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The market entered a new downward cycle triggered by an international losing trend, with growth forecasts for both the US and EU deteriorating. In Egypt, foreigners were once again net buyers especially with the lack of any good news on the local macroeconomic level.

Individual investors according to analysts are also pulling out of the market, where pessimism prevails due to negative expectations for the fourth quarter's earnings. These are due to be released soon by listed companies.

The CASE30 index ended Monday's transactions at 4,219.24 points, 8.20 per cent lower than its level at the start of 2009.

Now that the government has abandoned its crisis- proof approach, official figures are striking. Despite a 15.3 per cent increase in the number of tourists visiting Egypt in 2008 compared to 2007, growth rates in tourist arrivals in the three months starting September came to 11 per cent, 12 per cent and 2.8 per cent lower than their levels in September, October and November 2007 respectively. December's growth rate was negative, with the number of tourists at 4.5 per cent less in December 2008.

On another negative note, income from the Suez Canal dropped by about eight per cent in December to reach $391.8 million, compared to $426.3 million in December 2007.

ORASCOM TELECOM HOLDING (OTH): The regional telecommunications company's dispute with France Telecom concerning their shareholder agreement and their shares in the Egyptian Company for Mobile Services (MobiNil) is to be resolved by the international court of arbitration by the end of January. According to CI Capital, the party in whose favour the arbitration will end will be able to acquire the other party's stake in MobiNil at the market price or higher. The second party, in turn, can either accept the price or submit a counteroffer at an even higher price.

EL-SEWEDY CABLES: The company denied any link with a new electrometre plant inaugurated in Ethiopia under the name of El-Sewedy for electrometres.

PALM HILLS DEVELOPMENTS: The local real estate developer announced that its land bank value has increased by 70 per cent to reach LE33.1 billion in November 2008 compared to LE19.5 billion in March 2008. The evaluation covered a period that witnessed an increase in real estate prices. However, the local real estate market has experienced a major drop in prices since then, and the prices are not expected to rise anytime soon. This in turn might influence land valuation negatively. On another front, the company denied purchasing a land plot area from Damac Properties Egypt and added that there are even no negotiations concerning this subject.

AL-ARAFA FOR INVESTMENT AND CONSULTANCIES (ARAFA HOLDING): Press reports quoted company chairman Alaa Arafa as ruling out plans to exercise the five-year call option for the 65 per cent stake it does not yet own in the Italian Forall Group for at least another four years. Arafa Holding acquired a 35 per cent stake through a capital increase in the Italian group in December 2008. The company has been growing via the acquisition of new retail entities in Europe, making use of current low valuations, which in turn will create demand for its apparel, tailoring and textiles segments.

OLYMPIC GROUP (OG): The white goods producer announced it would reduce the price of its products by seven per cent, equivalent to its increase in prices during 2008, starting January as a way to activate demand on its inventory of electrical appliances. The company's net profit for the first nine months of the fiscal year 2008 declined by 10 per cent compared to the corresponding period of 2007. On another front, the one-month period that OG set to buy back three million treasury shares ended with no shares bought.

RAYA HOLDING FOR TECHNOLOGY AND COMMUNICATIONS: The company started up a new subsidiary under the name of Raya for international services to expand in IT investments in the region targeting mainly Nigeria and Algeria. Meanwhile, it is expanding in the real estate sector as it is planning to construct office buildings on its two land plots at the Fifth District, by the beginning of fiscal year 2010. A portion of the building will be rented out via Raya Leasing Company.

Compiled by Sherine Abdel-Razek