Market Report: Egypt major stocks edge 1 pct on EFG-Hermes deal

Country's largest investment bank returns to the market, fuelling gains for high-cap stocks and a revival in trading volume

Egypt's major stocks extended their gains on Monday as a deal for investment bank EFG-Hermes continued to carry the market upwards despite an unstable political climate.
The EGX30 main benchmark closed the session up 1.09 per cent to at 5,028 points. Gains, however, were mainly restricted to heavyweight stocks, with the broader EGX70 slipping 0.13 per cent.
"The market has not recovered completely and political uncertainty is still casting its shadow on trading," Mostafa Badra, acapital markets expert, told Ahram Online.
"Today trading was all about EFG-Hermes deal with QInvest and possible dividend distribution."
Shares in the Middle East's largest investment bank rallied on Monday after the announcement of an agreement with Qatar's QInvest to form a region-wide investment bank. EFG-Hermes shares were temporarily suspended on Sunday as the exchange awaited further news on the deal.
The deal means QInvest will control 60 per cent of the new bank, which will be called EFG-Hermes Qatar, and will pour in $250 million to increase its capital.
EFG-Hermes made up 27 per cent of Monday's total turnover of LE481 million ($80 million). It gained 5.24 per cent to close at LE13.85 per share.
This positive performance spilled over to other stocks.
"Those who sold Hermes' shares were most likely to re-invest it," Badra explained. "Orascom Construction Industries (OCI) is one of the best choices on the market."
OCI was the second most traded share in the session with LE46 million in turnover, gaining 1.96 per cent to close at LE280.08 per share.
The construction giant on 17 May acquired its shareholders consent to vote on a proposal to split the firm's construction and fertilisers businesses into two companies.
Such a move is thought to make both entities more competitive.
"These two shares fuelled the EGX30's gains," Badra said. "Other than that, foreigners are selling and turnover is still relatively low."
Foreign investors were the main net-sellers on Monday's session, offloading LE31.7 million more stocks than they bought.
It's the latest display of their negative position in the market -- a sign of lack of trust in proceedings, according to Badra.
Landline monopoly Telecom Egypt saw its shares slip 1 per cent to close at LE12.92 apiece despite news of Egypt's telecoms regulator mulling the tender of a licence for a fourth mobile operator.
"Telecom Egypt cannot take advantage of the new mobile licence because it already owns a share in Vodafone Egypt," said Badra.
The market's second-largest listed bank, National Societe Generale, gained 3.06 per cent on reasonable quarterly results.
The bank saw a mild dip in profits in the first quarter of 2012, hit by higher taxes and lower deposits. Profits fell to LE349.9 million ($57.9m) in the first quarter, a 3.8 per cent fall on the same period the year before.
From the 173 stocks traded on Monday, 65 gained in value and 84 declined.
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