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Looking for inspiration
Sherine Abdel Razek Published in Al-Ahram Weekly on 01 - 03 - 2001


By Sherine Abdel-Razek
It was a hard week for the market with a low average volume of daily trading and no sign of any news that might stimulate a revival.
The overall turnover for the week ending 22 February came to LE242.9 million compared to LE923.3 million during the previous week. This last figure was considerably higher than recent averages due to the execution of the merger between Pepsico's Tasty Foods with the snack manufacturer Chipsy. Moreover, the Capital Market Authority index lost another 4.51 points to close at 623.
Analysts attributed the decline to a 'stop-loss' rally as investors tried to minimise their losses by selling their holdings now for fear that prices might plunge even lower.
EFG-Hermes suggested that the market has been treading water since the start of the year due to a multitude of rumours which failed to translate into positive developments. A rapid acceleration in trading activity, according to EFG-Hermes analysts, is not expected until the market is provided with a significant catalyst.
Of the 162 companies traded during the week, only 38 increased the value of their shares, while 82 dropped in value and 42 remained static. Foreigners' transactions have also added to the gloominess pervading the market with their selling orders amounting to LE49.5 million, compared to LE36.4 million worth of buying orders.
Even the market's heavyweights posted considerable losses this week. MobiNil's share dropped beneath the LE70 level mark to close the week at LE67.3 smarting from the selling spree by foreign investors. This came amidst news that the company is about to begin to implement a modernisation plan for its networks that will cost almost LE1 billion. The company recently finalised an agreement with the Finnish company Nokia to provide it with new technologies related to the Wireless Application Protocol (WAP) services.
MobiNil's sister company Orascom Telecom (OT) suffered a similar fate closing the week LE1.5 lower at LE38.7. However, Orascom's construction division, Orascom Construction Industries (OCI), proved to be the conglomerate's great hope this week. The company announced that its unaudited net profits for fiscal year 2000 were LE279.1 million pounds -- a 47 per cent increase over the LE190.5 million it reaped during the previous year. These profits include a capital gain of LE20.4 million from the sale of investments.
However, OCI was an exception in the construction and housing sector which witnessed a sharp drop as investors' seemed to become less optimistic that the much-anticipated mortgage law would be introduced into parliament imminently. Registering a 42 per cent drop in its pre-tax profits for the 6-month period ending December 2000, Nasr City Housing suffered an approximately 10 per cent decline in the value of its shares to close at LE24.7.
The banking sector also joined the losers camp when investors in the sector seemed to opt to take profits on recent gains. Egyptian American Bank (EAB) saw its share drop slightly to LE2.59 following a recent increase in value due to rumours that a strategic investor had expressed interest in the bank.
Commercial International Bank (CIB), which is scheduled to release its results for the full year this week, closed at LE37.93 compared to its opening price of LE39.4.
The cement sector had an eventful week as Suez Cement captured the top spot on the list of most traded companies during some of the week's trading sessions. Investors were expressing optimism about the results of Suez Cement's extraordinary general meeting which was convened to discuss a capital increase. Its stock closed the week LE0.27 higher at LE36.67.
Suez Cement was not the sector's only news-maker, however. Helwan Cement capitalised on the announcement that the government has approved the sale of a 47.5 per cent stake in the company to a strategic investor instead of splitting the tranche between a public offering made through the stock exchange and a 27.8 per cent stake allocated to a strategic investor.
Also on a positive note, the British investment bank Gryphon has expressed interest in establishing a foothold in the Egyptian market through acquiring a number of local brokerage companies.
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