The market is still trying to escape the three-months long correction movement that stripped it of around 25 per cent of its value. Stocks started to show signs of strength in the week which ended on 4 May. The CASE 30 index closed at 1.6 per cent, reinforced by an obvious foreign interest. Foreigners' transactions accounted for 52 per cent of total market turnover, with the majority coming in on the buying side. But concerns also clouded the market as Gulf stocks took yet another plunge late last week, and in transactions early this week. The market had followed a sliding trend since the beginning of last February which was exacerbated by the sudden retreat in Gulf markets, especially Saudi Arabia, in mid-March. The market's capitalisation by the end of the week reached LE449 billion compared to LE532 billion in late January. ORASCOM TELECOM HOLDING: The company reflected two important developments during the week. The first was its decision to resort to the International Chamber of Commerce's International Court of Arbitration to resolve its dispute with Kuwaiti mobile operator Wataniya. The latter is alleged by Orascom to have breached an agreement which it had finalised with the Egyptian company in 2002. OTH had won the licence to operate GSM mobile services in Tunisia for $445 million. It subsequently formed Orascom Telecom Tunisie "Tunisiana", of which it sold a 50 per cent stake to Wataniya. According to the contract, OTH has the right to acquire Wataniya's stake if the latter materially breaches the agreement between them. While the nature of Wataniya's alleged breach has not been revealed, the two partners appear to have failed to reach an amicable settlement. OTH is also considering a bid for Saudi Arabia's third mobile phone license. The granting of licenses for the third mobile network is expected to take place in the fourth quarter of 2006. OTH had previously bid for Saudi Arabia's second mobile license but had lost the bid to the United Arab Emirates' state-run Emirates Telecommunications Corp Etisalat, which operates the famous Mobily network. The company is also mulling over a decision to increase its stake in Hutchinson Telecom International. OTH had bought a 19 per cent stake in Hutchinson in December 2005 for $1.3 billion. According to the purchasing deal, OTH has the right to increase its stake up to 23 per cent. ARAB COTTON GINNING: The market's most active stock in terms of traded-shares' volume ushered a host of good news to investors. ACG had signed a partnership agreement with the Saudi Amwal Al Khaleej group to establish a holding company with paid-in capital of LE1 billion. The venture will be called Arab Amwal Holding Company, and will specialise in buying and setting up cotton trading, manufacturing and exporting companies. It will also acquire spinning and weaving entities. ACG and Amwal will each hold a 43 per cent stake, with Polivara and individual investors holding the remaining 14 per cent. In its first expansionary move, the new holding company will fully acquire Nile Modern Cotton which is 60 per cent owned by ACG. With the price of LE345 offered for each Nile Modern Cotton share, the deal is expected to result in LE105 million capital gains for ACG, which bought the 60 per cent stake at LE200 per share last year. In a related development subscription in the as yet unsubscribed portion of ACG's capital increase ended on Tuesday. EFG-HERMES: Egypt's leading investment bank kept its position as the highest trading share, with LE597 million worth of shares exchanging hands during the week. The company announced that its remaining 427, 000 shares which were not bought in the second tranche of its capital increase have been 418 times oversubscribed. The allocation rate will be 0.239 per cent. This means that investors who submit bids to buy 1,000 shares will receive 24 shares only. Subscription in the second tranche which included 193.72 million shares at a par value of LE5, was 99 per cent subscribed and ended on 18 April. The shares of the capital increase are expected to be listed and traded by the end of this month, May. EFG ended the week in the red again, shedding off 2.3 per cent to end the week at LE59.27. TELECOM EGYPT: Egypt's sole fixed-phone line operator capitalised on its decision to join the competition in order to acquire the license for operating Egypt's third local mobile network. TE shares ended the week with an increase of 2.57 per cent, at the price of LE14.72. TE had announced last week that it formed an alliance with Telecom Italia to bid for the license, for which it is competing against 11 local, regional and international consortia. In a related move the head of Vodafone Egypt Mohamed Nosseir said that both Vodafone International and Alkan group which he owns are interested in buying back TE's 25.5 per cent stake in Vodafone Egypt, should TE acquire the licence. TE bought its stake in Vodafone Egypt at a preferential price of LE30 per share, compared to the latter's closing price of LE88. The National Telecommunication Regulatory Authority (NTRA) had announced that it will take six to eight weeks to undertake the technical assessment of the bids, and that qualified companies will subsequently be asked to submit their financial bids in an auction. NTRA announced that the minimum bidding value for the license is LE2.5 billion, in addition to an annual royalty fee of three per cent of gross revenues. ORASCOM CONSTRUCTION INDUSTRIES: The company's general assembly decided to distribute a dividend of LE2 per share for the fiscal year 2005. Shares acquired during the recent capital increase will be entitled to dividends. The company is also consolidating its position in the regional cement market with a production capacity of 14 million tonnes a year. This is expected to jump up to 21 million tonne per year within the next two months through projects which have been set up in Northern Iraq, Egypt and Pakistan.
