Both local and foreign investors held off activity as the market muddled through yet another week of sparse transactions. Sherine Abdel-Razek reports Amid enduring hopes for long- promised government measures to revive the market, thin transactions and weak demand were still the order of the day. Overall transactions came to LE525 million this week, 76 per cent of which were cornered by bond transactions -- a fact that reflects investors' apprehension towards shares' sluggish performance. The retreat in foreign participation in market activities was another indicator of the negative sentiment that pervaded the scene. Foreign buying and selling transactions fell to single digits, with buying orders accounting for only three per cent and selling activity for two per cent of overall market turnover. The Bank of Alexandria, Egypt's second largest state bank, announced its plan to sell its stakes in 14 investment projects. This comes as part of a scheme to reduce public banks' joint venture holdings -- the four public banks have shares in 24 joint venture banks. The stakes include 16 per cent of the Commercial and Development Bank's capital and 20 per cent of the International Islamic Investment and Development Bank. The cement sector was a major player throughout the week. Misr Beni Suef Cement soared on the back of rumours about talks with a foreign buyer. It jumped from less than LE13 earlier this month to around LE16.5 by the end of the week ending 20 June. The firm announced at the week's start that the selling price would stand at almost LE20. The company released a statement indicating that negotiations were about the sale of 75 per cent to 100 per cent of its equity. The US' ruling out of an immediate introduction of a free trade agreement with Egypt was seen in a negative light by investors. During his visit last week to Egypt, US Trade Representative Robert Zoellick said: "Trade does not exist in a vacuum, it has to be connected to the overall effort of the reform process." He said the US wanted Egypt to make more headway in economic reforms before opening talks on free trade. These reforms include eradicating all the obstacles in the customs system and reforming the exchange rate mechanism. The United States is Egypt's largest single trading partner, with bilateral trade amounting to $4.6 billion in 2001. Of this, Egyptian exports add up to less than $1 billion. Egypt believes an FTA with the US would boost its economy, particularly the textile industry restricted by export limits. A study undertaken in 1998 by the London-based Centre for Economic Policy Research suggested that free trade with the US would increase Egypt's GDP by 1.8 per cent and attract direct foreign investment to the country. The US currently has free trade agreements with Canada, Mexico, Israel and Jordan. It has opened negotiations on free trade agreements with Chile and Singapore. Under a new law recently passed by the Egyptian parliament to promote exports, narrow the trade deficit and ease the pressure on the pound, the government is required to set up a fund to provide credit facilities to export-oriented industries in order to improve and increase their production. Egypt's trade deficit was officially set at LE5.3 billion in January and February 2002, an eight per cent rise over the same period last year. The new law, however, has apparently failed to stir any positive sentiment in the market. Shares of all-time winners among foreign investors, such as Orascom Telecom and the Commercial International Bank (CIB), were badly hit by the retreat in foreign investment. Orascom Telecom declined from over LE10 to a new all-time low of LE9.20 during some sessions, ending the week at LE9.1. CIB closed at LE27.94. Meanwhile, Media Production City continued to lose ground, ending at LE10.03, due to investor worries about its financial performance. Pfizer was in the limelight, as news of local Viagra production and trading was topped by news of the company's Viagra production exclusivity.
