Still in the doldrums

By Sherine Abdel-Razek
The lack of a significant market catalyst conspired with the slowdown in global financial centres to give the Egyptian bourse another hard week
Faced with losses sustained by a number of its heavyweights and the aftermath of the global market shake-out, the market continued to have yet another difficult week.
This was reflected in comparatively thin trading during the week ending on 15 March. Daily transaction volumes were greatly subdued, reaching LE19 million on Tuesday, a level not witnessed since mid-October of last year. Overall transactions for the week came to LE269.68 million. The Capital Market Authority index lost a further 11 points to settle at 607 points. Out of 146 companies traded, 26 ended higher, 80 lost ground and the rest came flat.
Analysts attributed the decline in trading activity in part to the lack of any significant news nudging investors to either buy or sell. EFG-Hermes said that it is unlikely that the market will witness any acceleration in trading activity until some concrete privatisation developments take place to rekindle enthusiasm.
The market's poor performance can also be ascribed to the spiral decrease in Egyptian Global Depository Receipts (GDRs) being traded on the badly hit European markets. The GDRs have transferred the losing contagion to their twin shares traded on the local market, thus placing almost all the blue chip stocks in the red.
Among the companies with GDRs traded internationally that have sustained a heavy blow was Orascom Telecom, which has lost 16 per cent of its momentum, ending at LE29.79 -- its lowest price since the beginning of the year. The company also postponed the release of its results for fiscal year 2000 until the fourth week of March 2001, instead of the second week of March as previously scheduled.
Misr International Bank (MIB) also joined the losers camp. Egypt's second largest private sector bank posted a 20 per cent decrease in net profit for the year 2000. The bank's profit's came down to LE204.86 million, compared to LE 255.75 million for the previous year. This 19 per cent decline resulted from a rise in provisions and a slight fall in operating income.
The Egyptian industrial and healthcare conglomerate, Lakah Group, was no luckier. The company, among the nine others with GDRs traded internationally, has posted its results for the six months to 30 June, 2000, against the 12 months to 31 December, 1999. The group, which suffered the aftermath of a court ruling depriving its chairman, Rami Lakah, from his parliamentarian membership, has realised losses of LE418 million in the first half of 2000, compared to net profits of LE172.13 million for the whole previous year. Shares lost LE0.38 to close at LE1.46.
Despite securing the lion's share of overall turnover, having traded LE31.5 million worth of shares, Helwan Portland Cement still posted some losses this week. Shares dipped to LE40.96, compared to LE41.76 at the beginning of the week. The company's shares had been appreciating in recent weeks on news that the government's 47.5 per cent stake was to be sold to a strategic investor. Market watchers attribute this week's decline to investors' decisions to cash in on recent gains, or what is known as profit-taking activity.
On a more positive note, according to EFG-Hermes, the government's commitment to privatisation, as seen in the strategic sale of 12 million shares of Helwan Portland Cement, has given market players a positive long-term outlook. In the meantime, the market will most likely remain calm.
A brighter macroeconomic outlook may also revive market activity during the coming period. Recently released balance of payments figures show a significant improvement in the current account, stemming from a drop in demand for both foreign currency and imported goods. Moreover, the decline in foreign reserve levels was smaller compared to previous months
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