The Central Bank of Egypt's (CBE) decision not to raise interest rates despite inflationary pressures instigated optimism in the market. Investors seem to believe that the upward trend of prices will end in a few months, as soon as the aftermath of last year's increase in fuel and food prices subsides. The market's total turnover throughout the week ending 8 February came to LE3.8 billion, with the most actively-traded companies faring well enough to boost the CASE30 index by 3.1 per cent. On the downside, Egypt retreated on the Consumer Confidence Index of MasterCard; Egypt stood at 78.2 points on the index's 100-point scale, down from 83 points in the first half of 2006, when it was at its highest since 2004. Egypt ranked fourth in the Middle East. The index covers South Asian and African countries and depends on consumers' answers to questions on five variables: unemployment, economic growth, income, the stock market and standard of living. The index is used by international corporations, including MasterCard, when taking investment decisions in Egypt. ORASCOM TELECOM HOLDINGS (OTH) had another active week that was reflected in shares hitting an all-time high of LE424.18. The increased activity came on the back of a handful of good news, including increasing the size of its seven-year bond issue by $250 million to $750 million. OTH was able to attract more investors at a better-than-expected interest rate, to be paid on the bonds offering. The coupon reached 7.875 per cent, 37.5 basis points less than the initially expected rate. In another important development, Weather Investments, the owner of 51 per cent of OTH, bought the Greek mobile network TIM Hellas operator for 3.4 billion euros. After acquiring one of its three rivals on the Greek market in late 2006, TIM Hellas has a market share of 28 per cent. The Greek market has 13.3 million subscribers out of a population of 11.1 million, which means that it has a penetration rate of 122 per cent. Weather Investments will finance 500 million euros of the deal's value by borrowing from Citibank, Banca IMI and Deutsche Bank. It will keep the remaining 2.9 billion euros as net debt. TIM Hellas is not Weather's only Greek investment, as its subsidiary Wind owns a 51 per cent stake in Tellas, a separate Greek fixed line provider. Another important piece of news came from OTH's 19 per cent subsidiary Hutchison Telecommunications International Limited, which said it is planning to sell its 67 per cent stake in its Indian unit Hutch Essar. Press reports put the value of the company at $18-20 billion. EZZ STEEL's extraordinary general assembly of shareholders will convene on 17 February to approve the company's 50 million shares capital increase. The increase will take place through a private placement in which the existing shareholders are not permitted to subscribe. This will lead to diluting the holdings of these shareholders, on the top of which is Al-Ezz group, whose stake in the company will be reduced from 77 to 61 per cent. The fair value of the new shares will be determined by the demand on the shares. This shouldn't be less than the share's average price over the last two months, namely LE53.11. This values the capital increase at LE2.7 billion. EASTERN COMPANY (EC), Egypt's sole cigarette producer, posted an impressive 47 per cent increase in its net profits for the first half of 2006/2007, to reach LE342.3 million. A LE0.25 increase in the price of its best selling brand Cleopatra Golden King accounted for 50 per cent of sales in the first quarter of the year, and helped feed the increase. Moreover, sales of cigarettes produced under licence agreement grew by a double digit rate. The contract between British American Tobacco and EC was renewed in late 2006 for an additional seven years. COMMERCIAL INTERNATIONAL BANK (CIB) posted LE802 million in net profits during 2006, recording a 31 per cent increase on the previous year. These results are on an unconsolidated basis, since they do not take into consideration the results of Commercial International Capital Holding (CI-CH), CIB's 67 per cent owned financial services company. In October 2006, CIB, Naguib Sawiris, Oasis Capital Egypt and Dynamic Securities Trading agreed to form a strategic alliance, consolidating 100 per cent of their financial services under the umbrella of one holding company. The consolidated profits came at LE868 million. CIB's earnings were mainly driven by strong growth in non-interest income and the elimination of tax provisions, while deposits increased by 27 per cent. A commentary by EFG-Hermes on the results attributed the increase to less strict pricing on corporate loans by the bank, and to the upward pressure on interest rates on deposits that began towards the end of 2006. Expenses grew by 24 per cent as CIB expanded its branch network. The bank plans to expand even more by adding 20-25 branches during each of 2007 and 2008. The non-recurring cost of conducting a due diligence study to buy Bank of Alexandria also added to the expenses. CIB's general assembly will be held on 12 March to approve the results and the delisting of the company's shares from the Abu Dhabi Securities Market. MISR CEMENT QENA (MCQ) received an offer from the Spanish Cimpor Inversiones, which owns 99.9 per cent of Cimpor Egypt, to buy 100 per cent of the company at LE67 per share. Cimpor Inversiones can choose not to purchase Qena if the minimum number of shares offered is lower than 50 per cent plus one share. The offer was valid for one week ending 19 February. The offered price is 21.8 per cent higher than the company's share value on the last day of trading before announcing the bid. MCQ was established in 1997 but started operations in April 2002 in the Upper Egypt region. It has an annual cement capacity of 1.4 million tonnes, and a market share of 3.5 per cent. At the same time, it enjoys a 10-year tax holiday ending in 2012. Compiled by Sherine Abdel-Razek
