News of the bankruptcy of Lehman Brothers, the fourth largest US investment bank, and the sale of Merrill Lynch, sent tremors through financial markets across the globe starting Monday. Egypt was no exception. The already ailing CASE30 index fell to its lowest level in 13 months on Monday, continuing its five month-long slide. Foreigners, panicked by the bankruptcy of Lehman Brothers and taking it as an indication that the worst of the subprime crisis is not yet over, galloped towards a sharp exit from any risk-taking in international markets, launching a series of selling orders weighing down on the market. Consequently the index shed 5.52 per cent to 7,541.24 points. Similarly regional stock markets did not escape the slide, with Gulf stock indexes falling to 17-month lows in frantic trading. Dubai's index fell by eight per cent to its lowest level since April 2007. Qatar shed seven per cent of its stock value compared to six per cent and four per cent declines in the Saudi and Kuwaiti stock exchanges. News of the bankruptcy came after the bourse had suffered yet another hard week through 11 September, with news of the consumer price index -- the main measure of inflation -- increasing to 25 per cent in August, its highest level in 16 years, creating a negative sentiment in the market. TALAAT MUSTAFA GROUP HOLDING (TMG): The share that has attracted so much attention since its chairman was referred to the criminal court was the focus of two contradicting reports. On one hand the CBRE, an independent firm specialised in property valuation, put the TMG's assets at LE35.4 billion. However, Pharos Securities set the fair value of the share at LE8.10, the lowest valuation of the stock since its debut in the market last November. The US-based investment bank Morgan Stanley put the share value at LE9 last month. Pharos' current valuation is 33 per cent lower than that which it made in June of LE12.2. EFG and Commercial International Brokerage (CIBC) estimated TMG's shares fair value at LE16.2 and LE17.4 respectively. In addition, Pharos said the assets' value was estimated using current market prices, which it says are exaggerated. Pharos' assessment is based on the worst case scenario according to the expected 30-50 per cent decline in the property sector. Furthermore, sales were hurt by the slowdown in the property market and by the charges filed against TMG's former chairman. Earlier in the week, TMG announced that sales for the Madinaty project during the first half of 2008 reached LE6.3 billion, and the number of sold residential units reached 19,575. According to Mubasher News service, TMG announced in June it had sold 4,164 units for LE2 billion in five days only. As for hotel projects, TMG received about LE155 million net earnings from its stakes in the Four Seasons Nile Plaza, Sharm El-Sheikh, and San Stefano in Alexandria. ORASCOM CONSTRUCTION INDUSTRIES (OCI): The company board approved a coupon payment of $1 a share ($2 a share for GDRs), as a portion of its LE4.6 billion retained profits. On a positive note, HSBC raised OCI's stock fair value from LE600 to LE636 for the second time in less than two months. ORASCOM TELECOM HOLDING (OTH): Goldman Sachs, the global investment bank, removed the company from the list of its "buy" recommendations, reducing its share target price from LE100 to LE65. The stock lost almost 35 per cent since the investment bank gave it a recommendation. The downgrade was attributed to the problems facing the telecom operator in Pakistan and Algeria, as well as the limited acquisition opportunities on the long term. The same reasons were offered by HSBC as it reduced OTH's recommendation to the company's GDRs from "neutral "to "underweight". On another front, news spread through the week that Weather Investments, the owner of OTH, was looking at buying a stake in Telekom Austria, or merging the company with Orascom. The company's international expansion plans include investing $500-700 million in Globalive, its latest ventures in Canada, over the coming four years. According to OTH, Globalive's return on investments is expected to reach 20 per cent. TELECOM EGYPT (TE): The company has another year to enjoy its monopoly on local landline network after last week's decision to postpone the second fixed line licence overbidding for a year due to the slowdown in the global telecommunication market. Analysts believe that even when another contender enters the market this will not hit TE too hard, given that its network covers all of Egypt's governorates. CIBC maintained TE's 12-month fair value at LE25.10, which is almost 65 per cent higher than the company's current share value. Analysts believe that the year would give TE an opportunity to increase its market share and upgrade its services to be well prepared for the competition. Despite forecasts that TE's market share would be slightly hurt, revenues are projected to rise as the new operator will rent part of its network for its first two years of operation. Compiled by Sherine Abdel-Razek
