Mubarak's illness, news on the cabinet reshuffle and the seasonal summer lull resulted in subdued market transactions during the month of June, writes Sherine Abdel-Razek Starting June every year the market enters a seasonal lethargy, with the summer heat driving investors away. Transaction numbers are usually down during the summer months of June, July and August, but this year there was an additional mood of uncertainty as a result of President Mubarak's illness and the anticipated cabinet reshuffle. This combination of factors encouraged investors to keep their hands in their pockets. The overall market transactions for June amounted to LE1.95 billion compared with roughly double this amount in the previous month, and LE4.06 billion for the month of June last year. In addition, foreign selling accounted for 21.3 per cent of the market turnover compared with 14.1 per cent in buying bids. Improved performance was expected for bond transactions, as investors usually tend to invest in fixed income bonds during times of economic uncertainty. Bonds cornered 2.907 per cent of the sales market compared to 0.02 per cent last month. The telecom sector witnessed a relatively active month. The mobile operator rivals MobiNil and Vodafone Egypt introduced new packages for the pre- paid user market segment in an attempt to increase their client base. MobiNil's sister company Orascom Telecom (OT) made a lot of headlines during this month. It started off the month with impressive first quarter results. The company posted a 363 per cent jump in the first three months of the fiscal year, compared with the previous period last year, to reach LE474 million. The company is tapping into another Arab market. OT, through its 15 per cent share in Orascom Telecom Saudi Arabia Company, offered a bid to acquire a licence to operate Saudi Arabia's second mobile phone network. Saudi Arabia's Telecom Authority received bids, with values yet unrevealed, from eight international consortiums. Saudi Arabian companies must have a majority share of 51 per cent in each consortium in cooperation with an existing mobile phone operator. The competition is believed to be fierce, and includes international heavy weights such as Vodafone, as well as Saudi tycoons such as Saudi billionaire investor prince Al-Waleed Bin Talal of the Kingdom Telefonica consortium, who has said he will invest $1 billion in the project if he wins the bid. On a related note, OT has denied rumours that the company has bid for any licence or network in Turkey. Nassif Sawiris, OT's chairman, told the local press there had been no announcement from Turkey on an associated sale, however OT remains interested in the Turkish market. The star of the banking sector, Commercial International Bank, fared well amid news about its agreement with the Commercial Bank of Qatar to jointly offer a batch of services for associated clients. The new agreement will allow clients of both banks to transfer funds and issue credit cards as well as facilitating payment services. Media City witnessed high activity throughout the month, leading the market in terms of turnover on several occasions and remaining the most actively traded stocks. Another member of the Orascom group, Orascom Construction Industries (OCI), attracted some attention through the month. OCI's wholly owned subsidiary Algerian Cement Company (ACC) signed an international syndicated loan agreement for $112 million to finance construction of its second cement production line, which will have an annual capacity of 2.2 million tonnes. The second production line is scheduled for completion in mid 2005 and will increase the total plant production capacity to 4.4 million tonnes per annum, making ACC the largest producer of cement in Algeria. The international syndication includes the European Investment Bank (EIB), International Finance Corporation (IFC), Citibank Algeria and Citibank International London. The market was also affected by mixed macroeconomic data. The month started poorly in the wake of the Merrill Lynch report on the economy, which had a negative outlook in light of the ballooning budget deficit; this was followed by a report from the Economic and Social Development Planning Committee, which stated that the gap between saving and investment in Egypt has widened, with foreign investment remaining below 1 per cent. The report asserted that the real inflation rate is actually higher than the officially announced rate of 5.5 per cent. A group of 15 commodities selected by the committee research team showed average price hikes between 12-13 per cent over the past three months. According to Prime Securities, an economic and development assessment report issued by the Ministry of Planning, Egypt's GDP grew by 4.1 per cent during the nine-month period ending in March. The report attributed improved economic growth to the jump in tourism- related revenues. The hotels and food sector witnessed a 38.1 per cent growth during the same period, thanks to a 50 per cent increase in the number of tourists: 1.8 million visitors compared with 1.2 million for the same period last year. The total work force also grew by 0.6 per cent, reaching 20.7 million.
