The summer lull is how traders describe the slowdown in transactions on the stock market during the summer months when many investors take their annual leave. This year's summer thin transactions started earlier, as Ramadan, a month also characterised by low trading volumes, began in early May. The first weeks of Ramadan saw the market's main index the EGX30 losing eight per cent to reach 13,370 points. This compared to the 19,256 points it reached in early April. The beginning of the holy month also coincided with speculation that the government would introduce a scheduled increase in the stamp tax on market transactions. This pushed many investors into a wait-and-see mood until it became clear whether the extra levy would be enforced. However, the government has now decided to keep the rate at 0.15 per cent rather than raise it to 0.175 per cent. The prime minister met with the minister of the business enterprise sector, the head of the stock market, and the head of the Egyptian Financial Supervisory Association, the main market regulator, last week to discuss ways to energise the bourse. They discussed several proposals, topping the list being cancelling the increase in the stamp tax and revealing the schedule for the pending initial public offerings (IPOs) of state-owned companies.
EFG Hermes: The investment bank has signed a partnership agreement with Vietnam's Asia Commercial Bank Securities to give its clients the right to trade on the Hanoi Stock Exchange, the Ho Chi Minh City Exchange, and UPCOM. “The new partnership is yet another manifestation of our strategy to widen our geographic footprint and identify new opportunities. While the past two years have witnessed rapid expansion in African and Asian frontier markets with offices launched in Pakistan, Bangladesh, Nigeria and Kenya, we are now entering Southeast Asia to complete our emerging markets setup,” said Ali Khalpey, CEO of EFG Hermes Frontier, in a filing sent to the Cairo stock exchange. EFG Hermes's decision to enter the Vietnamese market comes as “the country's export-oriented manufacturing sector is seeing considerable gains as more multinationals seek to relocate production away from China and to Vietnam. This continuing shift comes against a backdrop of exchange rate stability and consistently rapid economic growth, which registered 6.79 per cent in the first quarter of 2019, Vietnam's second-strongest first-quarter growth rate since 2009,” the filing noted. EFG has 30 years of experience in the local market and abroad, with its current footprint spanning 12 countries across four continents.
Suez Cement: Egypt's largest privately-owned cement company has decided to suspend the operations of its 66.22 per cent owned subsidiary Tourah Portland Cement. The suspension, which is temporary, is due to “deteriorating financial results and accumulated losses” exceeding the value of shareholders' equity, a Suez Cement statement said. Tourah Portland Cement is Egypt's oldest cement company and was established in 1927. It consists of nine production lines, of which two are in operation, located in an area of 10,000,000 square metres in the Tourah district of Southern Cairo. It is not only Tourah Cement that has been incurring losses, as most Egyptian cement companies are also suffering from limited margins due to an oversupply of cement, with some 20 companies now working in the sector.
Heliopolis Housing and Development (HHD): The leading housing company will auction another parcel of land to finance debt repayments and investments, it was announced this week. The land is located in Heliopolis, and there are plans to sell off a total of 190 feddans. The HHD is also selling 32 plots through direct order agreements, and it offloaded a separate 1,980-feddan piece of land last week for LE99.3 million. The HHD was excluded last month from the first phase of the state-owned companies lined up for the sale of additional stakes on the Egyptian stock exchange as part of a state-owned companies privatisation programme. In the lineup now are Alexandria Containers and Abu Qir Fertilisers.
Raya Holding: The conglomerate, which covers 11 lines of business, might be the first to issue corporate bonds in Egypt in 10 years. The company said this week it was considering offering LE500 million of bonds in a three-year issue to finance its expansion rather than rely on costlier bank loans. The offering could take place before the end of the year, it said. The last significant corporate bonds issue in Egypt was for Mobinil, now Orange, in 2009. 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Compiled by Sherine Abdel-Razek
