After three weeks in the black, the market is heading back towards the light. Sherine Abdel-Razek reports The recent poor performance of the stock market seems to have been short-lived. The market began to get back in gear since mid-last week amid a renewed interest in blue chips which were pushed to attractively low prices during the previous weeks. Another factor is the release of strong first half financial results of listed companies as well as some good macro- economic news. The market maintained its healthy performance during the first two days of this trading week with the CASE30, tracking the changes in the market' most actively traded 30 stocks, ending Monday 29 August at 4904.8 points, its highest level since the last week of July. CASE started last week at 4,652 points. News of Orascom Telecom Holding's (OTH) financial results came after trading on Monday and was anticipated by worried investors due to press reports that the sale of 9.3 billion euros worth of debt to finance its chairman's, Naguib Sawiris, 12.1 billion euro buy-out of Wind, the Italian telecom group, is encountering difficulties. The Financial Times stated that the unprecedented size of the debt package is being closely watched by bankers seeking to judge the climate of the European loan market, where until recently deals worth three billion euros were considered large. It also stated that investors might be holding back so they can buy the debt cheaper in the secondary market. OTH's net profit for the first half of 2005 reached LE1.725 billion, marking an increase of 49 per cent over June 2004, and 19 per cent over the last quarter. Another impressive year-on-year gain was the 128 per cent increase in its total subscribers to reached 21.2 million. A company press release quoted Sawiris as saying, "OTH has successfully implemented its aggressive growth strategy as reflected in its solid results in subscribers, revenues and net income. OTH continues to capture the lion's share of the market in subsidiaries by capitalising on its market leadership in Algeria, Egypt, Iraq and Pakistan, and increased its market share in the rest of its operations." It is worth mentioning that the list of the top five companies in terms of weekly turnover included the four companies related to Orascom Group: OTH, Orascom Construction Industries, Orascom Housing and Development and MobiNil. The investment bank, EFG Hermes, generated the bulk of last week's transactions with LE340 million of its equity changing hands. Hermes gained some ground after denying rumours that Hassan Heikal, its CEO and Global Head of Investment Banking, is quitting. Heikal joined EFG-Hermes in September 1995, from Goldman Sachs, where he served in the Corporate Finance Division on the telecommunications team. EFG shares gained 10 per cent during the week to close at LE40.94. One of last week's main events was the execution of the ASEC Cement acquisition deal. Italcimenti acquired 98.6 per cent of ASEC Cement at LE29/share. Italcimenti, the world's fifth largest cement producer, has finalised the deal through its local subsidiary Suez Cement. Accordingly, the latter's production capacity will increase to 12 million tonnes a year. ASEC recorded a 146 per cent increase in its net profit in 2004 /2005 to LE179.8 million. National Société Générale Bank (NSGB) attracted the lime light as it was hitting all-time highs throughout last week. The vigorous demand on the bank's shares stems from its successful bid to buy 67 per cent of Misr International bank. NSGB is planning to increase its stake to 100 per cent or at least 75 per cent. Due to the acquisition, NSGB's consolidated assets now reach LE29.654 billion, ranking it first among private banks working in Egypt. CIB now comes in second with LE28.754 billion in assets. EAB is also about to be sold in light of the imminent privatisation of its parent company, the Bank of Alexandria. Furthermore, according to the Prime Securities weekly market report, Banque Misr and other shareholders announced that before the end of 2005, they plan to sell their controlling stake in Misr Romania Bank (MRB). Banque Misr and various Egyptian funds hold 51 per cent while the remaining 49 per cent is held by Romanian banks. It is worth noting that Bloom Bank, one of Lebanon's largest banks, is currently considering the acquisition of the soon to be offered stake in MRB, thus adding to its regional expansion plan. The increased activity in the market does not negate the fact that there are still a lot of investors who are cashing out their holdings in order to buy into the September offering of Alexandria Metallurgical Oils Company (AMOC). The stock market's supervisory body, the Capital Market Authority, received earlier this week the prospectus of AMOC to accredit it. This was followed by a meeting in which analysts briefed investment bankers on the details of the offering. AMOC is expected to float 20 per cent of its shares. Half of the offering will be floated in the form of an IPO and the rest will be sold through a private placement. The price of the shares is expected to range between LE45 and LE50. AMOC has realised LE517 million in revenue during 2004/2005 compared to LE99.6 million the previous year. AMOC is expected to attract a lot of investors since it belongs to the promising oil sector. AMOC's floatation comes a few weeks after Sidi Krir Petrochemicals Company (SIDPEC), Egypt's first oil to be privatised, was more than seven times oversubscribed when offered through the stock exchange. Macro-economic news is encouraging amidst the multitude of promises from presidential candidates for better living standards for Egyptians and more incentives for investment. Moreover, the latest figures for the local economy also give cause for optimism. According to the Central Bank of Egypt, net foreign reserves grew to reach $20.2 billion in July, versus $19.2 billion in June. Foreign reserves in July 2004 amounted to $14.4 billion. As for tourism, May witnessed a 12 per cent increase over May of last year in the number of tourists visiting Egypt. And Suez Canal revenues for the month of July came to $283 million versus the $261 million achieved during the same month last year.
