Foreigners' purchases have supported the market since the start of October, offsetting the effect of local investors' profit taking transactions and Arab inThe average value of daily transactions remained above the LE1 billion threshold and market experts believe it will exceed it in the coming period amid expectations of a soon to be seen revival in the market on the back of better economic indicators as well as strong third quarter results. News on the macroeconomic front is positive, with the value of Egypt's international reserves recording an 8.8 per cent month-on-month increase to reach $33.51 billion in September. The increase comes on the back of an influx of foreign currency revenues with the decline in tourism receipts easing through the month to 6.4 per cent compared to the 9.5 per cent in the first half of the year. The increase in inflation that reached 10.8 per cent during September from nine per cent in August, mainly due to higher food prices, was not reflected in the market. But analysts believe that if the increase persists, the Central Bank of Egypt might resort to increasing interest rates after lowering them six times since the beginning of the year. EGYPTIAN RESORTS COMPANY (ERC): The company owned by businessman Ibrahim Kamel completed its sale of 25 million treasury shares three weeks earlier than its announced date for doing so. Reuters quoted a company official as saying that the shares were bought in October 2008 for an average price of LE2.06 per share and that the company managed to sell them for an average of LE2.32 per share, realising a capital gain of LE6.5 million. The company will use the receipts as cash cushion in case it fails to sell any land plots in 2009. Company management does not expect to sell more than one plot by the year's end. GHABBOUR (GB) AUTO: The local leading car distributor is planning to issue LE1 billion worth of bonds to finance possible expansion. CI Capital commented on the move by noting that the company's "balance sheet is not highly leveraged as GB Auto's total debt compared to its capitalisation stood at 38 per cent at the end of June which is considered within the acceptable limits." CI Capital said that with the gradual recovery in the Egyptian automotive market in the third quarter, the company's results would show improvement. "The recovery in the auto market in Egypt will continue into 2010 and will reflect positively on GB Auto, which, we believe, should manage to at least maintain a 25 per cent market share in Egypt," said a CI Capital report. TELECOM EGYPT (TE): The company will not bid for LinkdotNet and Link Egypt, the two Internet units affiliated to Orascom Telecom (OT). Tarek Kamel, Egypt's telecommunications minister, announced last week that the decision to prohibit TE from acquiring the units is for the sake of ensuring competition, as TE currently owns TE Data, Egypt's largest ISP with regards to market share. "We will not allow it because it [TE] will be too dominant in the market. It would exceed 90 per cent of capacity, and I would be hesitant to allow that," said Kamel. On another front, OT declared that it might consider abandoning the sale of LinkdotNet if bids do not match company expectations. The decision will be made by the end of the year. Moreover, the company might be bidding for a Triple Play licence in Egypt. OT has experience in delivering such services in Italy and Greece through Weather (which owns 52 per cent of OT). ORASCOM HOUSING COMMUNITIES (OHC): The budget-housing arm of Orascom Development Holding is currently in talks with the Romanian government to build a four million square metre joint-venture housing project in Constanta, Romania, with an investment cost of $350 million. THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL): The company decided to distribute LE2 per share from the profits realised during the first half of 2009, which makes the pay out ratio around 21 per cent compared to 68 per cent in the corresponding period of last year. Beltone Financial commented on the decline by stating that the "difficulty of acquiring new credit facilities from banks could negatively impact Mobinil's dividend policy for year end 2009 and, therefore, the payout ratio would not be significantly higher than the current 21 per cent." This, according to the investment bank, might be a negative surprise for Mobinil's long-term investors. Compiled by Sherine Abdel-Razek
