An increased appetite by foreigners on the local market, due to a relative retreat in international markets, fed another surge in the CASE30. This brought it closer to the 11,000 points threshold during the week ending 10 January. The holiday-shortened week surprised market observers by exceptionally buoyant activity, with overall transactions worth LE7 billion in just three days of trading. News on the macro-economic level came to support the buoyant trend. The inflation rate stabilised at 6.9 per cent for the second month in a row during December 2007. Moreover, the Central Bank of Egypt announced that the country's foreign reserves reached $31.7 billion as of the end of December 2007, versus $31.5 billion in November 2007. Reserves recorded a 21.6 per cent increase in 2007. NAEEM HOLDING, the regional investment bank, is in the final stages of acquiring a controlling stake ranging between 75-80 per cent in Naeem KSA. The company will use sale proceeds of Naeem Holding's stake in the Watany Bank of Egypt, which amounts to more than $100 million, to finance the deal according to a Naeem Holding press release. The move came after Naeem Holding's board of directors decided to freeze its previous decision to increase its paid-in capital from $240 million to $320 million to finance expansion in the Gulf region. "The board's decision to cancel the capital increase was mainly to protect shareholders' rights, by eliminating the most expensive source of capital raising with its associated costs," stated the release. Naeem Holding is a local listed joint stock company established in 2006, and has activities encompassing brokerage, fund management, corporate finance and private equity in Egypt, Saudi Arabia and UAE. The company has plans to offer some of its shares on the London Stock Exchange in the form of GDRs. ORASCOM CONSTRUCTION INDUSTRIES (OCI) is about to sign a LE156 million contract with the local West Delta Electricity Production Company to build an electricity station at Sidi Kreir. Meanwhile, a senior company official said that OCI will begin transferring ownership of its cement group to the French Lafarge soon. The transfer will take place immediately after the Lafarge's general meeting on 22 January, while the sale will be executed in the first week of February. Lafarge plans to finance the purchase through a 7.2 billion euros loan arranged by BNP Paribas, Calyon and Morgan Stanley. COMMERCIAL INTERNATIONAL BANK (CIB), the leading Egyptian commercial bank, will soon launch an auto finance arm as part of a plan to develop its retail banking and consumer finance business. Accordingly, CIB will divest the 38.4 per cent stake it owns in the car financing company CONTACT Car Trading Company. EFG-Hermes commented on the move by saying that the divestiture of the CONTACT stake would have a minimal effect on its earnings, since CONTACT has accounted for just 0.6 per cent of CIB's 2006 reported net profit. According to CIB, the sale will generate a capital gain of approximately LE50.4 million in the first quarter of 2008. CIB will reinvest the proceeds from the sale into its retail and consumer banking business. TELECOM EGYPT (TE)'s problems with its joint venture company in Algeria, Lacom, seem to be escalating. It is rumoured that Minister of Communication and Information Technology Tareq Kamel will head a delegation to Algeria by the end of this month to discuss obstacles facing Lacom from Algerian authorities. Established three years ago to provide fixed- line services in Algeria, Lacom is a joint venture which is equally owned by TE and Orascom Telecom Holding (OTH). Both companies have accused the Algerian telecommunications regulator of giving preferential treatment to the state- owned fixed-line operator Algerie Telecom. Consequently, TE and OTH have hinted at the possibility of selling the operation. On another front, negotiations between Egypt's first mobile network operator MobiNil and TE to decrease tariffs from fixed lines to mobiles are facing several problems, and are not expected to end before March. In October 2007, TE sent a letter to MobiNil demanding several adjustments to the interconnection agreement that would result in lowering fixed-to- mobile tariffs, in light of lower mobile-to- mobile tariffs. ARAB COTTON GINNING (ACG)'s subsidiary Amwal Al-Arabia will sign a memorandum of understanding to acquire four companies for a total of $75 million. They are Setcore Spinning and Setcore Industrial Investment, which have facilities in the free zone in Borg Al-Arab, Alexandria. The other two are Nasco Cotton Trading, which imports and exports cotton, and United Cotton Co, which trades in cotton and is based in Dubai. The final agreement is scheduled for the end of January. CITADEL CAPITAL, the regional private equity firm, increased its paid-in-capital to reach LE1.65 billion, up from LE1.2 billion, by issuing new shares to existing shareholders. The capital increase, the second in three months, is to be used in financing the company's expansion plans in the oil and gas, cement and food industries. The company's recently finalised deals include purchasing Rally Energy, the Canadian oil and gas exploration and production company for $843 million, a 35 per cent stake in Algeria's Zahana cement company, and forming Guzoor Group by purchasing and merging together four Egyptian food industry companies. Citadel Capital was established in 2004 and has investments worth $7 billion in various sectors. Compiled by Sherine Abdel-Razek
