Political considerations together with Moody's downgrading of its rating for the bonds are weighing down on the market. Sherine Abdel-Razek reports The uncertainty surrounding the upcoming referendum on easing presidential candidacy stipulations has been throwing its shadow on the market for the last two weeks. However, the pressure on the market intensified last week when Moody's, the American rating agency, downgraded the local currency bond rating while maintaining its negative outlook for the economy. The rating agency attributed the move to the deterioration in public finances and the increasing public debt. The CASE 30 index dropped a significant 6.8 per cent to reach 4,126 during the week ending on 19 May 2005. The total value traded reached LE1,784 million compared to LE1,974 million during the previous week. The downward trend prevailed during Sunday transactions followed by a slight improvement on Monday. Analysts also believe that the impending IPO of 20 per cent of state-owned Sidi Krir Petrochemicals, is still pushing investors to liquidate other holdings in less attractive shares to be ready to buy into the promising oil company. The IPO will be the largest since the current government launched its wide-based economic reform. News of the listing of seven more Egyptian companies on the Morgan Stanley Capital International (MSCI) emerging markets index starting 1 June failed to offset the effect of the previous factors combined. Adding the following companies: EFG-Hermes Holding, Egyptian American Bank, Egyptian Financial and Industrial Company, Al-Ezz Steel Rebars, Misr Beni Sweif Cement, Olympic Group Financial Investments and Sinai Cement the number of Egyptian companies on the index will increase to 17. As a result of the annual review changes, Egypt's weight in the MSCI Emerging Markets Index is expected to increase marginally from 0.77 to 0.78 per cent. The index and the weight of different emerging markets on it is used by global fund managers to allocate their funds. Neighbouring Israel's weight on the index slipped from 3.8 to 3.7 per cent. A closer look at the performance of individual shares in the market reveals that the IT sector made headlines. The Ministry of Communication and Information Technology announced that it will began issuing a third cellular license, over the coming four months, with the bidding process to be finalised by early 2006 and associated network operations to start by the second quarter of 2007. MobiNil and Vodafone reacted to the news of new competition by depreciating by 7.7 per cent and nine per cent respectively. This came despite the fact that MobiNil's quarterly results released last week reflected upbeat subscriber and bottom line growth. MobiNil kept its downward trend through Monday to close at LE167. Raya Holding made its debut on the CASE last week and followed an upward trend in most of the trading sessions to close at LE30.19 on Monday compared to its offering price of LE27. Orascom Telecom (OT) announced its first quarter results after the trading day on Monday. Total subscribers grew by 21 per cent over last quarter to reach 17.5 million by the end of March 2005. Revenues came in at LE4.15 billion, 61 per cent above that of the corresponding period for last year and 14 per cent above the previous quarter. The company reported a 67 per cent growth in its net profit to reach LE789 million. The construction sector was the most active during last week's transactions. The sector's new star ASEC Cement ranked third in the market with regards to the value of transactions. LE84.3 million worth of ASEC shares were traded during the week. Established in August 2001, ASEC Cement's core shareholders are: ASEC (34.26 per cent), ARESCO (34.26 per cent), and free float (31.48 per cent). In December 2004, a private equity firm, Citadel Capital, acquired 49 per cent of ASEC (the controlling shareholder in ASEC Cement) from the family of the deceased founder and proceeded to turn ASEC Cement around both operationally and financially. Citadel Capital, through a 49 per cent stake in ASEC and a 2.58 per cent stake in ARESCO, controls 28.9 per cent of ASEC Cement. Moving to the banking sector, Monday witnessed the execution of an LE239 million worth acquisition deal in the banking sector through which the Arab African Bank bought all shares of the Misr America International Bank. The sale comes within the framework of selling off the state holdings in joint venture banks. The ownership structure of the bank included Misr Insurance Company 50.1 per cent, Banque du Caire 32.8 per cent, Industrial Development Bank 17 per cent, with the rest held by foreign investment funds. As for the privatisation news, the listing committee in the Egyptian stock exchange listed shares of the Egyptian Fertilisers Company as a step to privatise it. The company has a paid-in capital of $147 million. Several Arab and international companies offered bids for the company including Indian TATA which offered to buy 100 per cent, or at least 88 per cent of the company, at $305 per share.
