The market is revitalised by Telecom Egypt's IPO If there were signs that the market had started to gain momentum with the launch of Telecom Egypt's (TE) IPO, by the end of the one-week subscription period the mood was euphoric, finds Sherine Abdel-Razek. The week ending on 8 December saw CASE30, the market's main index, reaching record levels as it pushed through the 6,000 barrier to settle at 6,068 by the end of the week. Total market turnover reached LE3,772,69 billion. The unprecedented demand on the IPO resulted in a relatively low allocation rate of around 10 per cent, seen by many analysts as a blessing in disguise. "The disappointment following a minimal allocation rate of 10 per cent suggests there will be sizable liquidity flows into the market next week once investors get their money back," noted HC Securities in its weekly market review. The textile sector continued to perform well on the expectation of good results a year after the implementation of the QIZ agreement. Two textile companies were among the week's five highest gainers. Arab Polvara recorded a 36.85 per cent gain to close at LE14.26 per share. Arab Cotton Ginning (ACG), which gained 32.49 per cent, was the market's second highest in terms of the value of traded shares, with LE471.53 million worth of ACG's shares changing hands. As expected, it was pipped to the post by EFG, the main underwriter of TE's offering. Investors traded LE740.28 million worth of its shares, pushing the price to LE106.9. This week the investment bank changed its administrative structure as the board approved the promotion of Hassan Heikal and Yasser El-Malawani, EFG's two CEOs who, from January 2006, will now co-chair the board. Mohamed Taymour, the current chairman and founder of EFG, had earlier announced his intention to resign by the end of this year. With the debut of a new rival in the sector just a few days away, the telecom sector recorded good results. Still capitalising on its 75 per cent increase in net profits during the first nine month of the fiscal year, OT was heavily traded, recording a turnover of LE368.12 million. It ended the week at LE583.38, a 0.8 per cent gain. EFG has estimated the fair value of the share at LE686. Meanwhile, mobile network operators MobiNil and Vodafone realised impressive gains of 3.5 and 13.5 per cent, ending at LE194.23 and LE99.88 respectively. The banking sector had a good week, with rising star Al-Watany Bank of Egypt announcing that it will increase its paid in capital from LE500 million to LE750 million through a public offering. The move is a preliminary step to the acquisition of a small-sized bank. Al-Watany shares ended the week at LE26.15. The Bank of Alexandria and American Express this week choose between the offers submitted by HSBC bank and Calyon Bank to acquire the Egyptian American Bank (EAB). EAB was first offered for sale in 2001 only for Standard and Chartered Bank to pull out of the negotiations citing reservations on the exchange rate which Standard and Chartered deemed unrealistic. EAB shares rose to LE60 compared to LE55 the previous week. Elsewhere in the sector the Lebanese Bloom Bank succeeded in purchasing 98 per cent of Misr Romania for $97 million. Another second Lebanese bank, Audi, has also expressed interest in buying the United Egyptian Bank. Suez Canal Bank is currently undertaking a due diligence study of the latter. Macro economic indicators are expected to support market performance. Minister of Planning Osman Mohamed Osman this week revealed mostly impressive macro- economic figures for the third quarter of the fiscal year 2004/2005. The value of domestic investments increased by 17.8 per cent, pushing the GDP growth rate to 5.3 per cent compared to 4.8 per cent for the corresponding period last year. Even more significant, he said the inflation rate has been on the slide since the beginning of this year and, at three per cent, is now a quarter of its level on the previous year. This week also saw the announcement of a comprehensive 20-year industrial strategy that aims to increase both investments and exports to LE229 Billion and LE291 Billion respectively by 2025.
