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Still the same old story
Published in Al-Ahram Weekly on 24 - 11 - 2005

The market anticipates Telecom Egypt's IPO in bearish mood, reports Sherine Abdel-Razek
We've seen it before -- investors rushing to liquidate their holdings in companies across the board as they scramble to amass cash to inject in a pending IPO. It happened with SIDPEC and Amoc, and now the same scenario is repeating itself. This time it is the long awaited IPO of Egypt's fixed line monopoly, Telecom Egypt (TE).
The selling spree that dominated transactions in the third trading week of November drove CASE 30, the index tracing the market's most active 30 stocks, down to finish the week at 5,725 points, a 4.2 per cent drop on the previous week. Total market turnover in the last seven days reached LE3.457 billion, with bonds contributing LE305.47 million.
Shares in EFG-Hermes Holding ranked first in terms of the value of transactions. The company did, however, lose some ground over the course of the week, ending at LE83 compared to the LE90 something it has been hovering around since the beginning of the month.
The drop came despite remarkable growth in its nine-month profit, which reached LE187 million as opposed to the net loss of LE0.26 million recorded for the same period of last year. Meanwhile the company denied rumours that it is seeking a listing on the Abu Dhabi and Dubai stock exchanges. The company, which has been expanding its regional activities after opening a branch in the United Arab Emirates, has applied for a brokerage in Saudi Arabia.
Arab Cotton and Ginning Company remained the market's most active performer in terms of the volume of traded shares. Arab Cotton Ginning is currently in negotiation with Nile Modern Cotton as it seeks to increase its stake in the company. Nile Modern Cotton recently acquired a controlling stake in Kabo, which in turn owns 54 per cent of the Alexandria Spinning and Weaving Company.
The banking sector had a hectic week. CIB came under pressure after the National Bank of Egypt announced that it was selling its 19 per cent stake in the bank to an investment fund rather than an international financial institution, a move that disappointed investors who had hoped the bank would be sold at a high premium. The bank ended the week at LE53.90. Al-Watany could not buck the downward trend and last week's healthy performance was reversed as it ended at LE23.60, down from LE26.40, its highest level since February 2000.
BLOM Bank of Lebanon has submitted an offer for 43.7 million shares, representing 87.5 per cent of Misr Romanian Bank at a price of LE11.82 per share. BLOM Bank already owns the remaining 12.5 per cent of Misr Romanian. BLOM is seeking outright ownership and reserved the right to withdraw its offer should less than 27.2 million shares be up for grabs.
It was a relatively active week for the cement sector with most of the key players posting better than expected nine- month figures. ASEC Cement, which is now 98 per cent owned by Italcementi, announced profits of LE283 million for the first nine months of the year, a huge improvement on last year's LE2.8 million. Misr Beni Sweif Cement, Qena Cement and Sinai Cement recorded 289, 124 and 113 per cent increases respectively in their net profits. Demand for cement has been on the rise for a year now as the rise in oil prices has boosted real estate development in the Gulf.
Egypt's largest rug-maker, Oriental Weavers, has announced details of its long-awaited corporate restructuring. The company held an extraordinary general meeting on 12 November to approve the restructuring and an associated increase in paid-in capital from LE200 million to LE300 million.
As part of the restructuring, the Khamis family, as well as some non-family minority shareholders, will swap direct holdings in OW subsidiaries and sister companies for shares in OW. According to an EFG report the Khamis family's stake in OW is expected to increase from 71.7 per cent to 77.4 per cent following the restructuring.
The Khamis family intends to pursue a secondary offering of existing shares to increase the group's free float in addition to listing shares as GDRs in international markets.


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