Market report

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The market witnessed a fluctuating trend through the last 10 days with the vagueness of the France Telecom/Orascom Telecom deal casting shadows over the general financial mood. One of the market's main features in the recent period is that it has been driven by individuals mainly focussed on small companies, whose stocks have a speculative nature. This was reflected in the wider leaps and deeper dips that the EGX70, the index tracing the performance of small caps, achieved compared to the EGX30, which reflects the change in the market's blue chips. The government throughout the week took several steps aimed at stabilising different markets with the aim of protecting the local industry and eliminating anti-trust practices -- moves that would affect listed companies in both cases. First was the cancellation of the decision to impose protectionist tariffs on imported flat tin sheets keeping the 15 percent subsidy as the only support for the industry. The government also removed protectionist tariffs imposed on imported yarn. In return it will provide companies with an LE2.75 subsidy per kilo of yarn.

And the end of the week witnessed the government taking a hard stance on cement companies by referring senior officials in two cement companies to the prosecutor- general on charges of violating the anti-trust law. This came after Minister of Trade and Industry Rachid Mohamed Rachid asked the Egyptian Competition Authority to investigate reasons of the recent increase in cement prices.

Another change on the macroeconomic level was the decline in annual inflation rates through March to 12.1 per cent, compared to 13.5 per cent in February and a peak of 23.7 per cent in August 2008. The decline was described by analysts as illusory, who added that the retreat is due to high corresponding inflation rates the year before.

THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The company kept the lead in the Egyptian market with the number of its subscribers reaching a 21 million mark, giving it a market share of 48.5 per cent, compared to Vodafone Egypt's 42.3 per cent share and Etisalat Misr's 9.2 per cent stake.

GHABBOUR AUTO (GB AUTO): Beltone Securities set GB Auto's target share price at LE24, which is 52 per cent higher than the market price, recommending the shares as a "buy". The investment bank attributed the recommendation to "better-than-expected developments seen in Egyptian automobile industry". The bank added that it expects the sector to witness a massive boom in the near future. However, the first quarter of 2009 will be weak, as customers postponed their purchase decisions on the back of an expected price decline. Besides, bus sales were negatively impacted by the tourism slowdown and banks have tightened lending activities due to the global economic downturn.

EASTERN COMPANY (EC): Egypt's sole producer of cigarettes and tobacco approved its plan for 2009/2010, targeting a net profit of LE850 million. The company's extraordinary general assembly approved doubling its capital to LE750 million. It was also revealed in the meeting that the company will relocate to a new complex in 6 October city by 2011. The total cost of the complex is estimated at LE5.5 billion.

EGYPTIAN INTERNATIONAL PHARMACEUTICALS INDUSTRIES COMPANY (EIPICO): The company will reduce its holding in its 98.8 per cent- owned subsidiary Egyptian International Ampoules (EIACO) company by 0.2 per cent. The decision stemmed from the latter's unused capital. This is the second time EIPICO takes such step as it sold 74,000 shares of EIACO last year. EIACO has an annual capacity of 100 million ampoules but is expected to double this capacity in 2009.

RAYA HOLDING: The investment recommendation of this company, a major local distributor for mobile telephone companies, was downgraded by CI Capital from "underweight" to "sell". CI Capital put the target share price at LE5.3, which is 37 per cent lower than its current market price. The move was due to the negative effect that the economic slowdown has had on the company's trade and contact centre lines of businesses, with revenues declining by 23 per cent and eight per cent respectively through 2008.

NATIONAL CEMENT COMPANY: Egypt's sole totally state-owned cement company will finish upgrading two of its cement factories within 30 months, increasing its annual production capacity by one million tonnes. The upgrade will cut emissions from its plants. The company's general assembly convened on Monday and put together its plan for 2009/2010, through which it said will face challenges related to price hikes in the energy, service and transport sectors.

Compiled by Sherine Abdel-Razek