Levelling out

By Sherine Abdel-Razek
The stock exchange enjoyed a breather after a punishing week of falling prices, commented the online report by EFG-Hermes on the transactions of the last trading day of the week ending 11 January.
The gloomy mood prevailing over the market during the trading week was most evident with the losses incurred by even the market's heavyweights. Total transactions came to LE497 million which, while higher than last week's LE354 million, is still low given that one deal accounted for around 31 per cent of activities.
This deal was the privatisation of Kaha for Food Industries through the divestment of 4.5 million of its shares to the Ouf Group. The LE144 million deal, through which the Holding Company for Food Industries sold 90 per cent of its holding in Kaha, was executed at a price of LE32 per share.
Foreign interest in the market has picked up slightly due to the low prices for a number of attractive stocks. Buying transactions by both foreign individuals and institutions reached LE91 million compared to their selling orders of LE61 million.
Bucking the downward trend that has ensnared market players was MobiNil, which cornered 19.5 per cent of the overall turnover, ending the week at LE74.69 -- a closing price LE3.25 higher than last week. MobiNil was expected to witness fewer transactions due to analysts' expectations that its full-year net profit will be lower than forecast.
Orascom Telecom closed at LE46.35, a lower price than that at which it started the week. This decline was fuelled by fears that pre-IPO (initial public offering) investors will begin to liquidate their positions next week, when the lock-up period for transactions by this group ends.
Last week gave cement sector analysts a great deal of news to assess. While there was nothing new in the bidding process for Helwan Portland Cement, Ibrahim Kamel, a prominent Egyptian businessman, was quoted by Reuters as saying that a number of American investors have expressed interest in buying a stake in the National Cement Company. This interest was indicated during a meeting of American investors and Egyptian businessmen, including Kamel, which was held with Prime Minister Atef Ebeid during the previous week.
However, both Helwan and National Cement saw their shares drop in value over the week closing at LE37.7 and LE12.07, respectively. Traders attribute Helwan's decline to selling orders submitted by members of its employee shareholder association, which owns five per cent of the company.
Another important development was the announcement of the takeover of Blue Circle by the French construction materials company Lafarge -- both of which have local subsidiaries. With this acquisition, the capacity of Alexandria Portland Cement, which was bought in 1999 by Blue Circle, will be added to that of Beni Suef Cement, which is majority-owned by Lafarge, thereby giving the French company a 15 per cent share of the local cement market.
The big news of the week was the unveiling of the merger deal involving the potato chip market-leader Chipsy for Food Industries. The company announced that it will form a joint venture with US PepsiCo International's local subsidiary, Tasty Foods Egypt, which is Egypt's number two salty crisp producer. This new entity will buy 100 per cent of Chipsy for Food Industries at a price of LE15.15 per share. This puts the value of the deal at LE340 million.
Invigourated by this news, Chipsy's shares cruised the five per cent ceiling on the listed shares daily gains for three consecutive days before ending the week with a 16 per cent gain at LE13 -- its highest value since the beginning of August 1999.
In a sad end to the spiralling increases of Lakah Group shares, the value of these took a 10.8 per cent nose-dive to end the week at LE2.26. This came after a court ruled that the election of its chairman, Rami Lakah, to parliament was invalid because Lakah has dual nationality. Lakah's appeal against the ruling failed to stave off the decline. In the GDR (global depository receipt) market, the stock lost more than 18 per cent of its value.
And, as has been the case in the past, rumours drove the increase of some of the market's shares. Orascom Hotel Holdings and Orascom Projects & Touristic Development both benefited from talk that a partial sale of one of these companies is imminent -- something that is expected to improve cash flow.
Bond transactions remained fairly stable, accounting for 8 per cent of the overall transactions, with LE38.5 million-worth of bonds changing hands compared to LE49.5 million during the previous week.
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