As investors took their profits the market fell, only to rally on the back of a new settlement mechanism, writes Sherine Abdel-Razek Last week Cairo and Alexandria Stock Exchanges (CASE) launched same day trading settlement (T+0). The complete transaction for the buying and selling of shares in the 17 listed companies that met the Capital Market Authority's (CMA)s criteria for eligibility now takes place on the same day, rather than settlement taking place two days after transactions, as is the case under the T+2 system. Only seven brokerages were given CMA approval to adopt the shorter settlement mechanism and then only after they had shown they possessed the necessary know-how and infrastructure to implement it successfully. The new technique is expected to increase the liquidity of the 17 companies -- EFG-Hermes, Arab Cotton Ginning, Orascom Hotels & Developments (OHD), Egyptian Media Production, Orascom Construction Industries (OCI), Al-Ezz Ceramic & Porcelain, Arab Polivara Spinning & Weaving, Orascom Telecom, Commercial International bank (CIB), Vodafone, Egyptian American Bank, Al-Watany Bank of Egypt, Olympic Group, Misr Cement Qena, ANSDK, Misr Chemicals and MobiNil -- and thus their investment appeal. CASE officials believe that when applied to all traded shares T+0 could push daily market turnover to LE1 billion. Introduced on Thursday, 20 October, the first day of T+0 saw 15 of the 17 eligible stocks make gains, bringing the trading week to a happy close. Otherwise market sentiment was mixed. The CASE30 index hit a new high of 5,000 points on Monday, after which investors began two days of profit taking before the market rallied once more on the back of T+0. For the second week running EFG-Hermes Holding was the most widely traded stock with a turnover of LE549.33 million. This was coupled with an impressive 16.41 per cent hike in its price, as it ended the week at LE78.54. EFG's healthy performance comes after it bought back more than 4.3 million of its shares in the last six months to maintain price, and following its announcement of an ambitious regional expansion plan. Raya holdings also performed well, surging ahead 8.42 per cent to close at LE19.32. News of Raya's success in establishing the database of an affiliate of the Gulf Company for Food Industries, which dominates the Gulf food sector with a 60 per cent market shares, supported its rise. Telecom sector leader Orascom Telecom Holding (OTH) slipped to finish the week on LE556.49 compared to LE599 the previous week. The downward trend came as shareholders anticipated OTH's third quarter results as well as reacting to the decision to split its shares. OTH's board of directors is expected to recommend a 1:2 stock split for locally listed shares during the extraordinary general assembly meeting scheduled on 1 November. The split will not apply to OTH's London-listed Global Depository Receipts. Increased steel prices, which have risen from LE2,500 per tonne to LE3,000, boosted the performance of major steel manufacturers, with Al-Ezz Steel Rebars finishing the week ranked eighth among the market's most active stocks. With a turnover of LE198.88 million, it closed seven per cent up. Al-Watany Bank of Egypt (WBE) returned to the limelight, ending the week at LE19.20, its highest price since September 2002. HC securities gave the bank a "strong buy" recommendation after it set its target price per share at LE27.99. The recommendation is based on expectations of a 515 per cent increase in net income for the fiscal year. The report attributed the bank's performance to the new management's restructuring plans and settlement of bad debts. "WBE's new management has succeeded in reducing the bank's non performing loans significantly through large settlements and rescheduling. NPL provisions were fortified by LE46 million in the first half of 2004 and a strict provisioning schedule is being adhered to in order to bring NPL coverage ratio to 100 per cent by the end of 2006," noted the report. As for privatisation, competition to acquire the state-owned 36.2 per cent stake in the Egyptian Financial & Industrial Company (EFIC), Egypt's largest producer of phosphate fertilisers, with an 80 per cent market share, is expected to heat up now that the Egyptian Kuwaiti Holding Company (EKHC) has expressed interest. EKHC withdrew from the battle to acquire Egyptian Fertilisers (EF) in July, following which it sold its stake in EF. Five other institutions have shown interest in the acquisition, including CitadelCapital, which now owns 100 per cent of EF, HSBC, EFG- Hermes, HC Brokerage and the Arab African Bank. Market observers believe that the stake available in EFIC could increase to 41.2 per cent if the company's Employee Shareholder Association (ESA) agrees to sell its 5 per cent holding. EFIC's shares ended the week at LE115. Gulf interest extends beyond the fertilisers sector. The Kuwaiti Sultan Centre has submitted an offer to the Holding Company for Trade to acquire the store chain Omar Effendi, the only bid made so far for the 82-store nationwide group. Seven Arab investors expressed interest in Omar Effendi when the holding company first announced its intention to put it on the bloc. Press reports note that the chain is on offer for LE300 million, and that the sale conditions will include redundancy settlements for 50 per cent of the company's employees. Omar Effendi was established on 1956 and has a book value of LE130 million.
