Market Report: Bourse turns upside down as troubled firms make gains

A surge in real estate and above average turnover fails to save the Bourse from its first dip in a week

A revival of interest in scandal-struck Egyptian firms, signalled by a surge in real estate stocks, failed to save the Bourse from its first dip in over a week as the benchmark EGX30 slipped 0.3 per cent to 5,188 points on Wednesday.
"The worst performers of the year to date were the best performers today," said Walaa Hazem, financial analyst at HC Securities. "Investors were focusing on companies that have seen trouble but whose share prices are now low and attractive enough to counter the negative news."
Surprisingly strong trade in controversial companies like Ezz Steel, the Talaat Moustafa Group (TMG) and Palm Hills Development were parried by sell-offs elsewhere, forcing the broader EGX70 and EGX100 down 0.26 and 0.24 per cent respectively. Five market sectors posted overall gains while seven finished in the red.
Perhaps the most surprising performer among the 180 listed stocks was beleaguered property developer TMG, up 5.5 per cent despite its morning declaration of a 48 per cent year-on-year drop in profits for the first quarter of 2011.
TMG saw the day's second-highest turnover, according to Sigma Securities' website -- LE50.4 million from the day's unusually high total of LE612.6m.
Similarly embattled Palm Hills Development gained 4.26 per cent and big-cap SODIC rose 5.41 per cent amid rumours the government is considering negotiations with firms tarred with corruption allegations.
Biggest gains of all came for Namaa for Development and Real Estate Investment, up 7.64 per cent -- possibly benefiting from the tentative return of investors to less-exposed real estate stocks.
Elsewhere in the market, yesterday's announced changes in management at Ezz Steel continued to power gains of 4.04 per cent for Egypt's largest steel producer, contributing to an overall rise for the basic resources sector.
Telecoms closed marginally down, despite anticipation of strong first quarter 2011 results for Orascom Telecom due later in the day. Beltone Financial have predicted net profits for Orascom of US$973m againt a net loss of $179 million in the last quarter. But this failed to save shares from a 1.42 per cent dip.
"Orascom's profits will be high because of their sale of an asset [in Tunisia]," said Hazem. "What investors are more interested in is how it's performing in its core markets -- Egypt, Bangladesh -- and that's what they will base their trades on."
This kind of uncertainty, fuelled by regional unrest and unresolved corruption charges, is stalling the market, he believes.
"The problem now is that no-one can know the real valuation of companies. The market won't function as normal until we understand them," Hazem said.
Market participation kept to its post-Mubarak average, with Egyptians being responsible for 62 per cent of trade and net-sellers. Foreigners and Arabs were net-buyers.
Last week saw Egypt's stock exchange begin to swing back from a two-year low despite ongoing political uncertainty and security worries.Wednesday's 0.3 per cent loss is the EGX30's first dip since 8 May.