Positive sentiment is buoying the market on the back of the return of President Mubarak to Egypt, calming concerns about his health that stripped the market of gains since it was announced he was undergoing an operation. Foreign investors were net buyers through most of last week, and early trading sessions this week. HC Securities, the leading local investment bank, cut its recommendation for locally traded stocks to "neutral" from "overweight", citing expected currency weakness and a resulting rise in inflation. "We anticipate an asset allocation shift away from Egypt as investors become more confident in the situation surrounding Dubai debt negotiations and want to invest in countries with fiscal surpluses," HC's analysts said in a report. HC Securities focus stocks include Talaat Mustafa Group Holding, National Société Générale Bank, Al-Ezz Steel Rebars SAE and Citadel Capital. Egypt's cigarette monopoly has signed an agreement with the Jordanian Tag Company for Cigarettes and Tobacco to produce, market and distribute Eastern's products in Jordan. According to the agreement, Eastern will supply its partner with raw materials and technical support while the latter will make and sell Eastern's trademark brand Cleopatra cigarettes, as well as Cleopatra and Salloum water-pipe tobacco brands. "Jordan's Tag Company will distribute the products in the Hashemite Kingdom of Jordan and neighbouring countries, which will be reflected in increased revenues and the opening up of new export markets," said a statement sent by Eastern to the stock market. Commenting on the news, CI Capital said that the agreement would increase the contribution of exports to Eastern's overall sales from its low current level of two per cent. The statement added that in light of high tariffs imposed on imported tobacco in Jordan (around 180 per cent), toll manufacturing agreements -- being arrangements in which a firm processes raw materials or semi-finished goods for another firm -- is a way to enable Eastern Tobacco to penetrate the country's market. Jordan has one of the highest percentages of smokers, and the highest percentage of teen smokers, among Arab countries. RAYA HOLDING FOR TECHNOLOGY AND COMMUNICATIONS: The company has decided to withdraw from bidding for two licences to supply cable, voice and Internet services (triple-play) to gated residential compounds. Raya's chairman said in the local press that the economic feasibility of the project was not good because of tough conditions and restrictions the regulatory authority put on companies applying for the licence, both in geographical scope and the range of services. The National Telecommunication Regulatory Authority (NTRA) announced in September it was offering two such licences to serve rapidly growing residential compounds in suburbs. The bids were initially due in January, but the deadline was delayed to 15 April at the request of some bidders. On a related note, Telecom Egypt has reached an agreement with 12 housing compounds to extend ground fibre cables inside the compounds to provide triple-play services. Telecom Egypt, the 80 per cent state-owned fixed line monopoly, can service compounds irrespective of the two licences to be awarded by NTRA. Al-EZZ STEEL: In addition to the sit-in organised by workers of Ezz Dekheila -- where Al-Ezz Steel owns more than 50 per cent -- to ask for higher wages and bonuses, the group made news by reopening its flat steel plant that it decided to close in November 2008 due to slowing demand on the back of the global financial crisis. During the closure, the plant was renovated to produce both flat and long steel products, and is expected to utilise around 80 per cent of its capacity in the coming nine months. It has an annual capacity of 1.3 million tons. ORASCOM TELECOM (OT): The long term fair value of the company was valued at LE8.50 per share by EFG-Hermes which maintained its buy recommendation for OT based on "OT management's ability to negotiate the best price for its assets in difficult situations, based on historical precedents." OT posted a net loss of $46 million during the fourth quarter, which came higher than EFG's estimates of $26 million. Hermes attributed the difference to a provision for the Algerian operation, Djezzy, of $ 96 million, lower-than-expected earnings from its network in Bangladesh, Banglalink, and its sub-Saharan group Telecel Globe. On the other hand, Hermes believes that 1Q 2010 may see very weak, or even negative earnings as OT has agreed to pay another 20 per cent of the Algerian tax claim (or $110 million) to be able to continue its appeal against the claim. ORASCOM DEVELOPMENT HOLDING (ODH): The Swiss-based company is building budget houses in Romania on a 2.5 million square metre lot. While the company has been planning to expand in this sector, this is its first such project outside Egypt. The project, in which Orascom holds a 70 per cent stake, is expected to offer a total of 33,000 units developed over three phases. The first tranche should be operational within five years. Orascom Development, which is also listed in Egypt, specialises in building and managing mixed- use resorts, but also owns hotels and budget housing. It has projects in Jordan, the United Arab Emirates, Oman, Switzerland, Morocco, the United Kingdom and Turkey. Compiled by Sherine Abdel-Razek
