Al-Ahram Weekly Online   11 - 17 June 2009
Issue No. 951
Economy
 
Published in Cairo by AL-AHRAM established in 1875

Market report


The market witnessed marginal declines in the first three sessions of the week, in what was described as profit-taking activity after it snapped a 10 per cent surge last week. While the main index EGX30 ended the three sessions in the red, the buoyant transactions, hovering around LE1.2 billion on average, as well as the limited losses in the prices of most of the leading shares off set the losses and fuelled the general positive sentiment prevailing in the market.

News on the macroeconomic level was mixed. On a positive note, net international reserves changed their six-month long downward trend, registering an LE300 million increase in May as compared to April. After reaching its peak of LE35 billion in October 2008, reserves had a bleed of losses due to the drain in foreign exchange resources and the flight of foreign investments due to the financial crisis.

Further declines were reported in Suez Canal revenues on May which registered a 29 per cent decrease compared to the level on May 2008 and 1.3 per cent drop from its level on April 2009. The slowdown in international trade, on the back of the financial crisis as well as piracy off the Somali coast of the Red Sea, together weighed down canal revenues.

EZZ STEEL REBARS: The company's revenues declined by 32.3 per cent in the first quarter of 2009 compared to the same quarter last year, to reach LE3.4 billion. As for net profits, the decline was even higher, retreating by 71.9 per cent. The bottom line figure stood at LE1.3 billion. Beltone financial commented on the news saying that the decline was expected due to steel prices heading south from an average of LE3925 per tonne during the first quarter of 2008 to LE3,200 in the first quarter of this year. Moreover, Ezz Steel Rebars' plant in Suez, which has a production capacity of 1.2 million tonnes of flat steel, is currently closed for maintenance. The decline in profits of Ezz Dekheila, a subsidiary of the company, fed the overall retreat. The profit margins of Ezz Dekheila were eaten up by its buying iron ore, the main raw material, through a contract that was concluded at 2008 high prices.

ORASCOM CONSTRUCTION INDUSTRIES (OCI): The company announced that its joint venture with the Spanish water management company has won the contract of the Ministry of Housing, Utilities and Urban Development to design and execute a wastewater treatment plant in New Cairo. The plant, which is a 20-year-old public private partnership, has a capacity of 250,000 cubic metres a day. Work on the project is expected to start by the end of 2009 and will take 24 months for the plant to start operation. Aqualia operates over 300 plants with a capacity of 400 million cubic metres per year in more than 14 countries in Europe, Central America, Asia and the Middle East and North Africa region.

HOUSING AND DEVELOPMENT BANK (HDB): The bank, which has expressed interested in buying 60 per cent of one of the UAE- based Damac projects in New Cairo, said the decision concerning the offer will come out in two weeks time. HDB is offering to buy the stake through a consortium that includes the Egyptian Arab Land Bank and Holding Company for Investments and Development.

Damac Properties requested to extend the time limit on the deal, which was supposed to be finalised in April, to 24 June, allowing it time to study the buying consortium outlook for the future of the affiliate after the sale. The consortium has previously asked to postpone the deadline to end the due diligence process -- which began at the end of February -- to 24 May. The deadline was further extended to 7 June to give Damac the time it needed to provide the consortium with necessary information.

EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The saga of dispute between France Telecom and Orascom Telecom Holding (OTH) over Mobinil continued through the week with Cairo's Economic Court saying that the case, filed by OTH against France Telecom, does not come under its jurisdiction.

OTH is suing its French rival claiming that the latter was late in submitting buying orders for the free floated shares in Mobinil, after the International Court of Arbitration at the International Chamber of Commerce in Geneva ruled in April that France Telecom must buy OTH's 28.75 per cent stake in the holding company at a price of LE273.26 per share. The two sides are now at loggerheads over the future of the other shares in the company, and the price France Telecom should pay for them.

Compiled by Sherine Abdel-Razek

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