Market report

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The market returned to the red again with its blue chip EGX30 index ending at 5,730 points on Monday. The decline, however, does not seem to be worrying to financial experts who see it as expected profit taking, underlining that the market is both attractive and has the potential to regain strength.

The tenure of market chairman Maged Shawqi was renewed for four more years.

On the macroeconomic level, Egypt's economy may grow by nearly five per cent in the current fiscal year, 2009/2010 according to Minister of Finance Youssef Boutros Ghali. "We are aiming for 4.5 per cent. Probably, given the developments we are seeing in the domestic economy and the developments we are seeing abroad, we will be closer to five per cent."

Ghali also said that the government is targeting a budget deficit of 8.5 per cent in the current fiscal year compared with 6.7 per cent in the previous year.

ORASCOM TELECOM (OT): In a new chapter in its dispute with France Telecom (FT) over the ownership of Mobinil, OT decided to discontinue proceedings against FT before the Economic Court. A statement issued by OT said that it was clear from recent public announcements by FT that it has no intention of extending a public tender offer at the same price an international court ruled it should buy OT's shares in Mobinil. The statement also noted that the decision aimed at avoiding unnecessary costs and to help OT focus attention on the business of running Mobinil. Meanwhile, FT still upholds the complaint it submitted to the Capital Market Authority (CMA) Grievances Committee after the CMA rejected two offers it submitted to buy 100 per cent of Mobinil.

CI Capital commented that the shareholding tussle between OT and FT over Mobinil appears on its way to resolution, noting that, "Mobinil's minority investors may have negative sentiment on its stock as they lose hope for the previously expected high premium in case of selling Mobinil at LE273.26 per share, the price FT was supposed to buy shares in Mobinil for."

On a related note, the Ministry of Communications and Information Technology has published mobile subscription figures as of the end of April. The number of mobile subscribers in Egypt increased by one million during the month, marking a nine per cent increase on March's figures. Vodafone Egypt (VFE) reported the highest share of net adds at 64 per cent, followed by Mobinil with a 56 per cent increase in mobile subscribers.

EZZ STEEL REBARS: The company reduced its selling prices for July contracts to LE2,900 per tonne. This came as other steel producing companies like Al-Garhy and Beshay increased slightly their selling prices to hover around LE2,860.

The Ezz move aims at regaining its market share from imported Turkish steel that recently witnessed a price increase of 16 per cent to reach $500 per tonne due to a recent increase in billet prices.

However, CI Capital saw the move from a different angle: "The increase in billet prices coupled with the decrease in Ezz Group selling prices will have a negative effect on the group's profitability margins."

OLYMPIC GROUP (OG): The CMA approved OG's acquisition of 98.8 per cent of Cairo Feeding Industries (CFI). The deal will be executed through a 1:1 share swap whereby OG's treasury shares will be swapped against CFI shares according to OG's share price on the day of the transaction. CFI is wholly owned by Ahmed El-Bakri, OG's new chairman and managing director.

CFI, which has enjoyed tax exemption for eight years, achieved net profits of LE19 million in the last year.

ORASCOM CONSTRUCTION INDUSTRIES (OCI): The fertilisers business within OCI is expected to benefit from new international projects facing delays. According to the International Fertilisers Industry Association (IFA), no supply surplus is thus expected before 2013.

Moreover, at Sorfert, OCI's Algerian plant will start on the second quarter of 2010.

Compiled by Sherine Abdel-Razek