Market report

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Foreign selling orders, local fear-driven divestment sprees and a falling contagion from international markets have all been cited as justifications for numerous consecutive setbacks in the market's performance and none helped in correcting its southward trend. The brief improvements in CASE30 did little to help the index break strong resistance to rise above 3,600 points, ending Tuesday transactions at 3,553 points.

The macroeconomic spectrum is overcast by the release of a number of negative economic indicators, showing that the effect of the global turmoil has indeed hit the local front. The decline in inflation rates to 14.4 per cent in January compared to 18.3 in December failed to brighten the situation up as the main driver behind the decline was a decrease in international prices and not locally driven.

Egypt's net international reserves retreated for the third consecutive month, to reach $33.4 billion at the end of January 2009, down from $34.1 billion in December 2008. Despite the fall, reserves registered a year-on-year growth of 3.8 per cent, the lowest since October 2004 when it started its uninterrupted rise.

ORASCOM TELECOM HOLDING (OTH): After its failure to buy back treasury stocks within the framework of a plan it announced at the end of November, OTH submitted an application to the Capital Markets Authority (CMA) and the Egyptian Exchange to repurchase both GDRs and local shares of up to 65 million shares over the next three months. OTH justified its not implementing the previous plan by saying that the best use of its resources during the buyback period had been to invest in its operations in Canada and North Korea, especially as bank credit had been hard to obtain with recent economic conditions. The new plan supported the shares of the company to realise a double-digit gain in the early trading sessions of the week after it recorded a 52-week low on the previous week. OTH had previously announced that excess cash would be allocated to dividends, a share buyback programme or the group's debt reduction.

AL-SEWEDY CABLES: The company's transformer factory in Zambia started its operations with annual capacity of 1,200 transformers directed to the local Zambian market as well as 16 neighbouring African markets. The Zambian market is huge with a demand of 1,500 to 2,000 transformers a year. Al-Sewedy is also building two transformer factories in Egypt that are expected to launch production shortly.

HOUSING AND DEVELOPMENT BANK: The bank said it is considering acquiring a stake in one of the three projects that the UAE-based company Damac operates in Egypt.

ALEXANDRIA MEDICAL SERVICES: Biddings for a majority stake in the company's equity is overheating. An Indian investor increased his bid for 100 per cent of the company from LE72 per share to LE80 pushing the value of the deal to LE112 million. The new Indian offer outbid that of the Egyptian investor Gamal Abdel-Fattah Hamada, who had offered LE73.50. The Indian investor initially offered LE62 per share, which was challenged by a bid from Short Hills Development, affiliated with EFG Hermes' Private Equity arm, at LE65 per share.

VODAFONE EGYPT (VFE): The number of subscribers in the Vodafone network increased by 1.22 million subscribers in the fourth quarter of 2008 so that the overall subscribers base widened to 17.6 million. VFE is the largest second mobile network operator in Egypt after MobiNil which has 20.1 million subscribers.

HELIOPOLIS HOUSING AND URBANISATION: The company formed a consortium with four state-owned companies to buy 353,000 square metres of land in Alexandria from the Holding Company for Metallurgical Industries. The consortium paid approximately LE2,500 per square metre of land, or around LE875 million in total. On another front, the company said it is about to start its securitisation arm in collaboration with three other real estate companies.

Compiled by Sherine Abdel-Razek