The market had a very tough start this week, with the CASE30 losing more than 5.5 per cent of its value on Sunday and Monday. This raised many questions about any imminent recovery from a two-month-old setback. Sunday's decline of 4.2 per cent was the most since mid-January and the steepest, with shares across the board ending in the red. Bloody Sunday, as coined by some market watchers, came on the back of a handful of local and international developments. A bearish sentiment is overshadowing the markets worldwide amid a sharp increase in oil prices, and signs of a looming global inflationary crisis which may push interest rates higher in the Euro zone and the US, eventually leading to further global economic slowdown. Companies whose shares have foreign exposure through being listed on international markets as Gars were the hardest hit. The losses incurred by these companies, including Orascom Telecom Holding (OTH), Orascom Construction Industries (OCI) and Commercial International Bank (CIB), weighed down on the entire market. This triggered a panic selling spree in Gulf countries which had their fair share of losses on Sunday, with the Kuwaiti stock market losing 108 points and that of Dubai and Doha losing 1.5 and 0.5 per cent, respectively. While the decline was attributed by some to the Central Bank of Egypt (CBE) raising the overnight and discount rates, others believe that the effect of this move is almost unnoticed so far and thus expect a rebound soon. This is especially so because the losses shouldered by most of the listed companies made their price/earning (P/E) ratio, a main indicator in assessing the appeal of any market, at a very attractive level. The P/E of the market is around 12 times compared to an average of 13.5 times among markets, included in Standard and Pours emerging markets index. Another positive factor is that next week will witness listed companies disclosing their first half results, expected to be heart warming. AL-EZZ STEEL REBARS (EZZ STEEL) realised a 57 per cent increase in its earnings to reach LE436 million in the first quarter of 2008. A 35 per cent surge in the company's sales figure has boosted the performance. EFG-Hermes commented that the improvement is due to the company's renewed ability to pass along higher input prices to end customers. The 35 per cent increase in sales was due entirely to higher steel prices that more than offset a two per cent decline in finished steel production. Ezz Dekheila Steel is the group's cash cow, as it contributes to the earnings by 86 per cent of consolidated earnings. Ezz Steel owns almost 53 per cent of Ezz Dekheila. ORASCOM CONSTRUCTION INDUSTRIES (OCI), the regional construction and fertilisers group, acquired a 20 per cent equity stake in the American fertiliser group Gavilon Trade. According to the deal, OCI will pay $340 million for the 20 per cent stake. Gavilon provides physical distribution, merchandising and trading across basic inputs and outputs, including fertiliser products, grains, feed ingredients and energy products. Gavilon's fertiliser trade activity is the largest independent importer of fertilisers into the United States, with 7.1 million tonnes of fertiliser products sold during 2007, and a 15 per cent market share. Gavilon also provides logistical and risk- management services, including commodity infrastructure for agricultural activities, to customers in the agriculture and energy markets. In another development, BESIX -- which is 50 per cent owned by OC -- has been awarded a $400 million contract to design and build a Transit System in Dubai, as part of a consortium with the French Alstom. BESIX's share of the contract is approximately $175 million. TALAAT MUSTAFA GROUP (TMG)'s 74 per cent-owned Arab Company for Hotels and Tourism Investment (ICON) has won a land concession in Luxor. Earlier this year, TMG said it will build a new Four Seasons luxury hotel on the land plot. Offering the highest bid, ICON won a 50 year concession which can be renewed for another 50 years. According to the deal, ICON will pay an annual fee of LE6.8 million starting in January 2012. This sum will increase by five per cent each year to a maximum of LE20 million in 2034. The company also plans to build a cruise ship to be managed together with the hotel by the Four Seasons group. TMG's most recent residential compound, Madinaty, also includes a Four Seasons hotel. THE NATIONAL BANK OF EGYPT (NBE), the country's largest bank, sold stakes in six publicly traded companies for LE5.29 billion on the stock market. The revenues will be divided between NBE and Banque Misr to settle public sector debts to both banks and finance their restructuring. Analysts also see the move as a way to compensate for the loss of receipts of the Banque du Caire sale. The six companies with stakes being sold are the Egyptian Resorts Company representing Abu Qir Fertilisers, Misr Cement Qena, Ezz Dekheila Steel, SIDPEC and AMOC. Compiled by Sherine Abdel-Razek
