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New all time highs
Published in Al-Ahram Weekly on 23 - 06 - 2005

The market is sky-rocketing thanks to a new tax law and a fast-paced acceleration programme. Sherine Abdel-Razek reports
An overall positive sentiment is driving the market towards bullish transactions pushing its indices to new all time highs through the last trading week and the first two days of this week.
While the overall turnover of last week's trading came to LE2 billion, Monday's alone was as high as LE1 billion.
Market observers attributed the rally to several intelligent manoeuvres by the government, citing the new tax bill and developments in privatisation as well as the excitement generated by Sidi Krir for Petrochemicals (SIDPEC)'s IPO.
Ending Monday's transactions at 4927.59 points, the Cairo and Alexandria Stock Exchange's 30 most heavily traded companies index (CASE30), recorded its highest level since its inception.
SIDPEC's IPO and private placement both closed on Sunday. While the IPO was three times oversubscribed the private placement attracted buying offers that exceeded the issue by a factor 8.3. The Saudi Naeem group alone, affiliated to the Saudi Investment bank, secured 94 per cent of the private placement shares and a 7.5 per cent stake in SIDPEC. The average price the Saudi group paid for the share came to around 87.5 per share. the highest offered price came at LE90.75. Meanwhile, shares offered through the IPO were sold for LE70 per share.
Market observers noted that the IPO was less attractive than expected but this was in fact a blessing for the market. "Sidi Krir's IPO had investors bundling funds and holding off the market for a time, but after seeing the offer was not as cheap as anticipated, investors decided to put their money back into the exchange," noted the weekly market review of HC Securities. The offered shares of the IPO were at LE70 with a minimum purchase of 1,000 shares.
One of the market's main attractions is the developing situation regarding intense competition to acquire Egyptian Fertilisers Company (EFC).
A consortium led by Citadel Capital Company has announced their bid to acquire 100 per cent of EFC, with a minimum of a 75 per cent stake, at $475 a share. The bid took the market by surprise as the prevailing belief the day before was that the Egyptian Kuwaiti holding company would acquire EFC as it increased its offer for buying 88 per cent of EFC to $462 per share thus pushing the Indian TATA chemicals company out of the competition. TATA's last bid was $352 per share.
A senior TATA official was quoted by Reuters as saying that to beat the Kuwaiti Holding company's offer his company would have to invest more than $950 million, including the value of the bid and a $250 million loan needed for future expansions in EFC. The official pointed out that TATA can use this sum of money to set up a new plant in Egypt, an alternative more appealing to TATA hence its subsequent withdrawal from the bid. .
Market observers still expect higher offers as the price earning ratio of the company according to Citadel's consortium bid comes to around 8.5, a considerably low level compared to a market average
Saudi for Basic Industries Companies (SABIC) has expressed an interest in EFC but has not submitted an offer. EFC is 46 per cent owned by the Egyptian government. Also, it is important to note that the Egyptian Kuwaiti Holding Company already owns 11.75 per cent of EFC.
The week's top gainer was Orascom Hotels and Development (OHD) as it sky-rocketed by 17.03 per cent and closed at LE37.94 per share. OHD has an upcoming LE120 million capital increase through a rights offering of 24 million shares.
As usual Orascom Telecom (OT) made headlines during the week. OT, UAE-based Majid Al-Futtaim Group and Saudi-based Olayan Group have formed a consortium called Oasis Egypt to invest in companies being privatised in Egypt. Oasis Egypt had capital of up to $150 million and will focus on boosting development in Egypt. OT will be the major shareholder in the new company with a 40 per cent stake. The rest of the capital will be equally divided between the other two partners.
EFG-Hermes, Egypt's largest investment bank is buying back two million treasury shares, a move believed to enhance the share's performance amid the euphoria associated with EFG's regional expansion. It was among the week's best performers gaining nine per cent to close at LE33.75.
The news of privatization is heart--warming to minister of investment, Mahmoud Mohie El Din, who said that the privatisation of Egypt Aluminum, Egypt's largest Aluminum producer and exporter, is under consideration. The state currently owns 92 per cent of the company, a stake that Mohie El Din believes can be decreased to 80.
The local bond market's turnover last week came to LE171.4 million compared to LE47.2 million the week before; with the bulk of trading done by primary dealers.


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