This week witnessed many important developments on the macroeconomic level. The first came last Thursday with the Central Bank of Egypt (CBE) deciding to keep its overnight lending and deposit facility interest rates unchanged at 13.5 per cent and 11.5 per cent. This marks the first meeting by the CBE's Monetary Policy Committee (MPC) this year, out of seven, in which the rate was not reduced. The decision came on the back of the relaxing of inflationary pressures, according to the CBE. A few days later, the Central Agency for Public Mobilisation and Statistics (CAPMAS) revealed the inflation figures for October, indicating a decline in the Consumer Price Index, Egypt's main measure of inflation, to reach 20.2 per cent compared to figures for October 2007, and to 21.3 per cent in September 2008. "Such depressed growth is driven by the 33 per cent decline in international oil prices, filtering its effect on food prices, leading to a month on month decline of 1.4 per cent," said CI Capital Holding (CICH) in a research note. The note added that in light of the current global turmoil and the anticipated decline in oil prices, CICH believes inflation will continue its declining trend to record 18.6 per cent in November 2008. In addition to the brand new asset management technique revealed on Monday, investors received another piece of good news, namely that the second phase of the banking reform programme would start early next month and would be expected to continue for the next three to four years. The programme includes an increase in the paid-in capital of the National Bank of Egypt and Banque Misr to LE5 billion each from LE2.7 and LE2.5 respectively. The programme has set the end of June 2009 as the deadline for the scheduled merger between the Housing and Development Bank and the Egypt Arab Land Bank. These titbits of good news absorbed the heavy selling during several days this week and gave the market a push to return back to the near LE1 billion-mark of daily transactions. PALM HILLS DEVELOPMENT: The development company realised a 232.5 per cent increase in its sales through the nine months ending September this year to reach LE1.095 billion. Another impressive figure was the 206 per cent increase in its net income through the period, to reach LE544.2 million, thanks to increased demand on the company's units at resorts in the North Coast and Ain Sokhna during the summer period. Meanwhile, the company reported that during the month of October, on the back of the global financial crisis, it received LE80 million worth of cancellations of reservations on its units. The overall value of reservations during the month came to LE400 million. Palm Hills added that cancellations for November so far are fewer than in October, and are expected to reach the usual range experienced during recent months, ranging between LE40 and LE50 million. SUEZ CANAL BANK (SCB): The bank's net profit through the three quarters ending September came to zero -- the same level for the same time last year. By contrast, the bank's net investment income surged by 133 per cent to reach LE431 million, mainly on the back of a surge in income from the sale of investments, including the sale receipts of its stake in Suez Canal for Technology Settling. Had it not realised this one-off income, the figure would have been reduced by 222 per cent. The bank's provisions increased to LE567 million compared to LE254 million in the corresponding period of 2007. The bank aims at increasing its loan-loss provisions to LE3 billion by the end of this year. Beltone Financial commented on these results by saying that despite the growth witnessed in core-banking operations, the net profit figure was to be expected since the bank is focussed on booking provisions. However, Beltone questioned the bank's ability to achieve its LE3 billion loan-loss provision target by the end of this year. The investment bank also said that unless the Suez Canal Bank sold further investments it might continue to record zero profits until the second quarter of 2009. EGYPTIAN ALEXANDRIA SODIUM CARBONATE (EASC): The sale of the company to the Belgian Solvay for Chemicals and Pharmaceuticals was executed in the local bourse on 9 November. Solvay, the world's largest soda-ash producer, is paying LE760 million for the purchase. Solvay is expected to expand the operations of the Egyptian firm and to double its capacity to 200,000 tonnes in one year. Until last week the company was considered a rebound in the local privatisation programme, being the first to be sold in a couple of years. However, it is now considered Egypt's last company to be sold under the old privatisation law. EFG-HERMES: Egypt's largest investment bank is said to be planning to launch a new fund with a $500 million capital, to take advantage of low equity prices, over the next six to nine months. Reuters quoted a partner in EFG calling the fund a special situations fund. The source added that merger plans between EFG and the Lebanese commercial Bank Audi will be revisited after they were put on hold due to what the two parties called "unfavourable conditions". He also revealed that EFG-Hermes, active in most of the Gulf states, was also eyeing expansion into North Africa and was already in talks about establishing a presence in Algeria, Sudan and Libya. However, the licences or start dates for these operations are not yet set. Compiled by Sherine Abdel-Razek
