The market showed a zigzagging performance during the first days of this trading week. Transactions ended up five per cent on Tuesday after a similar decline on Monday and a marginal loss on Sunday. CASE30 ended Tuesday's transactions at 3,866 points, its lowest level since April 2005. The overall pessimistic atmosphere is still prevailing, pushing large market caps further southwards. The Price Earning ratio, a main indicator on the pricing of the shares, fell as low as four times in some cases. Foreigners are still net sellers on most of the trading days. The picture on the macroeconomic front is anything but rosy. Addressing the lower and upper houses of parliament early this week, President Hosni Mubarak said that Egypt's already-wide budget deficit would increase as the country spends more to avert an economic slowdown. Egypt's budget deficit was expected to stabilise during the current fiscal year at 6.9 per cent. He did not give further details on the deficit, which the government had pledged to reduce to 4.5 per cent of GDP by 2010. This came a few days after Minister of Economic Development Othman Mohamed Othman confirmed that the Egyptian economy started experiencing the negative effects of the global economic slowdown, where primary estimates indicate that Egypt's GDP growth for the first quarter of 2008/2009 declined to 5.8 per cent compared to 6.5 per cent in the corresponding period of the previous year. This decline was driven by the slowdown in high growth sectors, including the construction sector, where the growth rate declined to 9.5 per cent compared to 14.5 per cent in the first quarter of 2007/2008. SUEZ CEMENT denied that it increased its ex-factory price by LE45 per tonne.The company confirmed that its ex-factory prices have not increased since early August. The move came after the Ministry of Trade and Industry had requested that some cement producers, including the Egyptian Cement Company, Sinai Cement Company, and Suez Cement Company justify their latest cement ex-factory price increases. Sinai Cement also denied raising its ex-factory price by LE70 per tonne, confirming that its current ex-factory price is LE392.50 per tonne (in addition to LE2.50 in sales tax). The ministry is currently studying the imposition of an export tariff on cement exports. PALM HILLS DEVELOPMENTS: The leading real estate development company established a joint venture with the Saudi Al-Baltan Group. The new company has a paid-in capital of 600 million Saudi riyals and is 51 per cent owned by Palm Hills. The company has already bought 6.8 million square metres in Saudi Arabia and it intends to partially finance its projects there through a loan of 400 million Saudi riyals. The first project of the new company will be in Jeddah on a total area of 3 million square metres. Meanwhile, it signed a memorandum of understanding with Ritz Carlton to manage a hotel and golf club at Palm Hills Golf Club and Resort at the Sixth of October City. The hotel will have a capacity of 140 rooms. Moreover, the company will hold a board of directors meeting to discuss the potential of establishing a mortgage financing subsidiary. RAYA HOLDING: The company posted a 43 per cent decline in its net profit for the first nine months of the year to LE41.1 million. Medhat Khalil, chairman of the company, increased his stake in the company from 5.25 per cent to 14.29 per cent over the previous two months. ORASCOM TELECOM HOLDING (OTH): Moody's ratings downgraded its outlook for OTH from stable to negative citing reduced financial stability. The rating agency said that while OTH acquired a decent sum of cash through the sale of its subsidiary in Iraq and the disposal of its remaining stake in HTIL, it has subsequently redeployed the funds to repurchase its own shares, to acquire a frequency spectrum in Canada and to finance its joint venture in North Korea. Moody's also underscored the difficulties faced by OTH's Pakistani subsidiary Mobilink. "Of further consideration is the fact that over the course of the year, political and economic risk has increased in Pakistan, which represents a material part of Orascom Telecom's revenues." noted Moody's statement. Moody's said that OTH will have to adhere to more prudent financial policies to maintain its current rating to compensate for the increased business risk and significantly diminished financial flexibility. On another front, OTH sold 100 per cent of OrasInvest, a tech solution company, to Abu Dhabi Investment, a UAE-based private equity group for $180 million. The buyer will pay $90 million in cash this month and the rest will be paid in the form of interest-bearing promissory notes due 12 months after the closing of the transaction. According to Bloomberg, this transaction will generate a capital gain of $175 million. OTH also announced this week that it has secured commitments for a $230 million senior bond facility with a maturity of three to four years. EFG-HERMES: The leading investment bank is still muddling through the repercussions of the financial meltdown on investment banks worldwide. HSBC reduced the company's target price from LE78 to LE19, which is still around 18 per cent higher than the share's market value at the end of last week. Moreover, HSBC downgraded its recommendation on the stock from "Overweight" to "Natural". HSBC expected the financial services market as a whole to weaken during fiscal year 2009/2010 and to rebound before the yearend. HSBC expected the growth rate of financial advisory fees to decline by five per cent during 2008 compared to an 11 per cent increase on 2007. Mubasher news website said that according to the fundamental analysis, the share's stock price was set at LE29, pointing out that the investment bank has a solid financial position, as it has available liquidity of LE2.3 billion till the end of September 2008. Compiled by Sherine Abdel-Razek
