By Sherine Abdel-Razek The market is closed for the sixth week in a row. The government's reluctance to open it is based on fears of an expected mounted selling pressure. The stock market authority and the Egyptian Financial Services Authority (EFSA), the market's regulator, are taking steps to hedge against the nose dive. Brokerages will now require investors pay margins or present more collateral when the client's debt reaches 70 per cent of the shares' value at the end of trading each day, instead of the current 60 per cent. While brokerages had earlier been allowed to make the margin calls at 60 per cent earlier, they will now sell the client's shares, or liquidate the collateral, when debt reaches 80 per cent of the shares according to the new EFSA rules on margin trading. A new fund is being formed under the name of Egypt's Future to invest in the market as soon as it opens. The new fund has a minimum capital of LE250 million. Certificates of the fund will be priced at LE10 each. The manager of the fund has not been determined yet. Fears of a collapse are not the only concern investors are having now, as reports in the last few days pointed that the head of the exchange, Khaled Serry Siyam, has submitted his resignation, a move that would add to the feeling of uncertainty surrounding the market. Moving to the macroeconomic scene, the Central Bank of Egypt's Monetary Policy Committee's first meeting since the revolution decided to keep the interest rates steady at 8.25 per cent for deposits, and 9.75 per cent for lending. It has left those overnight policy rates unchanged since September 2009. The decision was expected by analysts and aims at balancing the upside inflation risks, partly from potential supply shortages, and downside growth risks stemming from the immediate aftermath of the uprising. Inflation figures in February edged down with urban inflation year-on-year reaching 10.7 per cent from 10.8 per cent in January, while core inflation, which cuts out subsidised goods and volatile items including fruit and vegetables, eased to 9.51 per cent from 9.74 per cent. On another level, the rating agency Standard & Poor's (S&P) affirmed Egypt's "BB" long- term foreign currency credit rating which "reflects our view that the immediate risks to the government's credit standing have receded," S&P said in a statement. However, the negative outlook remained leaving Egypt vulnerable to a potential downgrade this year or next. JUHAYNA: Egypt's largest dairy and juice maker was found by the Egyptian Competition Authority to be violating competition law. The Antitrust Authority said that Juhayna, together with the International Company for Agro-Industrial Projects (Beyti), and the Nile Company for Food Industries (Enjoy), had fixed prices of raw milk bought from farmers rather than leaving it to market forces. The companies were paying an average price of LE2.7 per kilogram of raw milk instead of the LE3 asked for by the Egyptian Milk Producers Association (EMPA). The firms would have a 15-day period to stop their violations, a statement on the website of the authority said. Juhayna reported a 23.3 per cent rise in 2010 full-year net profit earlier this week. The company exports a tenth of its output, 80 per cent to North Africa and the Middle East and the rest to the United States, Europe and Japan. ORASCOM CONSTRUCTION INDUSTRIES (OCI): The leading construction, cement and fertilisers company posted a 76.1 per cent rise in fourth-quarter net profit to reach $186.0 million. Moreover, the company said prospects for construction awards continue to be positive and it expects fertiliser demand to remain healthy in the current year. Prospects for Orascom Construction, whose two main activities each account for around half of its earnings, have been threatened by Egypt's political instability but its London-quoted stock has rallied from lows seen earlier this year. OCI said it had been awarded about $50 million in contracts in Egypt in February and it would bid for several large infrastructure and road projects in coming weeks. The political unrest in Egypt and the Middle East will likely delay the launch of several public private partnership projects (PPP), which OCI was a primary candidate to win, analysts say. OCI, which generated 71 per cent of its construction revenue from outside of Egypt during the year, said building at its Sorfert Algeria project was 96 per cent complete and commercial production was expected to start in the fourth quarter of 2011. It said its fertiliser units in Egypt continued to produce as normal, and expected fertiliser prices to remain healthy during 2011 with prices fluctuating based on regular seasonal variations in demand. TALAAT MUSTAFA GROUP (TMG): Egypt's biggest developer by market value posted an 18.3 per cent decline in its fourth quarter profits after a legal row over its flagship project cut into margins. The firm's 2010 net profit was LE1 billion, which implied a fourth-quarter net profit of LE136.4 million. Analysts say the firm's net profit fell after a legal dispute on the 2005 sale of public land to TMG for its $3 billion Madinaty residential and commercial project on Cairo's outskirts. The Madinaty project has been mired in a legal row since September when a court upheld a ruling that a sale of state land to TMG was illegal because there was no auction. Madinaty's plot makes up about two thirds of TMG's land. The firm will pay one bonus share for every 40 shares outstanding. Revenues increased 10.4 per cent year-on-year to LE5.3 billion. Analysts had previously expected the firm's sales to be held back in the fourth quarter as investors wait for new legislation to unify state land allocations, which Nazif's cabinet had vowed to push for and had already drafted.
