The market had one of its strongest weeks in the past year, supported by strong indicators of an end to the recession in the United States. The main index EGX30 ended Monday's session at 6,620 points -- almost seven per cent higher than its level a week before, marking its highest level since the outbreak of the financial crisis in early October 2008.
With Ramadan's trading sessions shortened by only three hours during the Muslim holy month of fasting the week witnessed the return of the above-one-billion value of transactions buoyed by foreign buyers.
Moreover, the market has been capitalising on a series of good pieces of news, starting with the international rating agency Moody's upgrading its outlook for the Egyptian economy from negative to stable on the back of retreat in inflationary pressures. Moreover, growth figures for the year came better than expected at 4.7 per cent, despite the slide in revenues in tourism, the Suez Canal and remittances due to the financial crisis. The increase in private consumption and public investments has cushioned the fall in revenues, according to government officials' statements.
On another positive note, a handful of international oil companies signed exploration deals worth LE2.3 billion with the Ministry of Petroleum last week, a development which would be positively reflected on the foreign direct investment figures. The FDIs entering Egypt during financial year (FY) 2008/09 came at $8.1 billion compared to $13 billion a year earlier.
EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The company is in a fierce competition with its two rivals Vodafone Egypt and Etisalat Misr as proven by their summer and Ramadan offers. According to Reuters news agency, Mobinil and Etisalat Egypt, a unit of United Arab Emirates-based Etisalat, have cut their roaming fees to 50 piastres per minute for customers to receive calls from Egypt, while performing the minor pilgrimage, omra, in Saudi Arabia during Ramadan. Vodafone Egypt, a subsidiary of global operator Vodafone, is offering six free roaming minutes in any 10 days of Ramadan for Egyptians in Saudi Arabia for a one-off cost of LE3.
On another note, Morgan Stanley raised its price target and earnings estimates on Mobinil and said hopes for a tender offer by France Telecom to buy the outstanding shares of the firm might support its share price in the near term. "Mobinil offers pure-play exposure to growth opportunity in Egypt," said Morgan Stanley, which raised its price target on the stock by about 14 per cent to LE202. The brokerage also raised its 2009 net income estimate on Mobinil by 12 per cent to LE1,836 million.
AL-EZZ STEEL REBARS: The company that monopolises the steel sector with a 65 per cent market share kept its prices unchanged for the rest of the month at LE2,930 per tonne despite moves by rivals to increase their prices to roam around LE3,000 last week citing high billet prices. Steel producers are obliged to announce their prices at the beginning of each month.
On another front, Ezz Al-Dekheila Steel, which is 52.1 per cent owned by Al-Ezz Steel Rebars announced its second quarter results showing an 8.2 per cent decline in its revenues for the second quarter, compared to the first quarter, to reach LE2.05 billion. Moreover, net profits for the first half of the year were 78.4 per cent lower than the first six months of 2008. High cost of production and low steel prices, analysts say, are the reasons behind the decline.
ORASCOM TELECOM (OT): The dispute between the regional mobile operator and France Telecom over their shares in Mobinil had a new development with the latter appealing the rejection of its third bid for the remaining shares of Mobinil. The Egyptian Financial Supervisory Authority has rejected three offers by France Telecom to acquire the remaining shares of Mobinil as too low, saying they were less than the price set by an arbitration ruling for the majority of the company. France Telecom won an arbitration ruling in April requiring Orascom to sell its stake in Mobinil Telecom, a holding company that owns 51 per cent of the Egyptian Company for Mobile Services for LE273 per share. France Telecom offered LE237 a share in its last bid. A committee will rule on the appeal within 60 days.
Compiled by Sherine Abdel-Razek