An improved performance by international investors has pushed the market upward for the second week in a row. The 30 most actively traded index CASE30 edged 5.3 per cent up during the week ending 5 September, to exceed the 8,000 points mark again, closing the week at 8,166. Analysts believe that the positive sentiment generated at last week's Euromoney conference in Cairo stirred interest in the market. On the sidelines of the conference, Minister of Finance Youssef Boutros Ghali predicted that GDP growth will soon reach 8-9 per cent, compared to 7.1 per cent in fiscal year 2006-2007. Moreover, Ghali stressed that the government is strongly committed to reducing the budget deficit to three per cent of GDP. The fiscal deficit, one of the most pressing economic woes, has already been reduced from nine per cent three years ago to the current 5.5. At Euromoney, it was also revealed that a small and medium enterprise stock exchange is expected to launch in October, 2007. The exchange, which will have lower brokerage fees, will list companies with a capital of LE500,000 to LE20 million. Another development which was unveiled earlier in the week was the reduction of all securities registration fees. According to the new regulations, CASE will receive LE12 commission on each LE100,000 in transactions on listed companies and LE1 on unlisted ones. VODAFONE EGYPT announced early last week its willingness to buy all the company's free floated shares, representing only 0.3 per cent of its equity, at LE97.11 per share. The company is delisting from the CASE as its ownership is now divided between Vodafone Group, which owns 55 per cent, and the fixed line monopoly Telecom Egypt with a 44.7 per cent stake. Accordingly, ask and bid orders will be registered by any brokerage company until 23 September, to be executed on 24 September. ORASCOM TELECOM HOLDING (OTH) subscribers in six markets increased by 50.5 per cent to reach 61.5 million in June, compared to 40.8 million in June, 2006. The company's Pakistani network Mobilink alone contributed 45.3 per cent of the growth in subscribers. The company's net income increased by 200.5 per cent, to reach $995 million thanks to the $713 million one-off gain. The gain resulted from HTIL's -- a 19 per cent-owned subsidiary of OTH -- spinning off Hutch Isaar. OTH announced last week that it signed a binding agreement to form a joint venture with Korek Telecom, the Kurdish operator that was granted one of the three 15-year licences in Iraq. OTH and Korek will contribute the assets of Iraqna and Korek, respectively, into the joint venture which was valued at $2.2 billion. OTH will hold an equity interest of 70 per cent, and Korek the rest. NAEEM HOLDING is expanding its business range with plans to set up a $200 million mortgage finance company to tap surging demand for real estate in Egypt. The financial firm's decision coincided with the Mortgage Finance Authority (MFA) issuing new regulations on mortgages provided to foreigners in Egypt in foreign currencies. The regulations stipulate that the mortgages should be confined to financing the purchase of residential, administrative, services or commercial units, and that borrowers have the capacity to make due payments in the same foreign currency. The new regulations also mandate that the mortgages would have a loan-to-value ratio of no more than 65 per cent, in order to limit the lender's exposure to foreign exchange fluctuations in the event of default. EFG-HERMES's leading mutual fund, the EFG- Hermes Egypt Fund, has been granted an "AA" rating by Standard & Poor's, making it the first fund in Egypt to receive the distinction. The leading investment bank also succeeded in advising on a deal for Australian Leighton Holdings' acquisition of a 45 per cent stake of the Dubai-based Al-Habtoor, for a value of three billion Arab Emirates Dirhams. EFG-Hermes acted as the sole financial advisor to Al-Habtoor Engineering on the transaction. ORASCOM CONSTRUCTION INDUSTRIES (OCI), the regional cement and construction group, witnessed a 46 per cent hike in its net income during the first half of 2007, compared to the corresponding period of the previous year. The company's profits came at LE1.752 billion. OCI sales increased by 43 per cent to reach LE9.874 billion, of which 82 per cent was generated outside Egypt as the company's focus is on the Middle East and Africa, where margins are higher in comparison to those in Europe. Revenues from the cement line soared by 74 per cent to reflect capacity additions in Egypt, Algeria, Iraq and Spain, and pushing overall sales to 8.4 million tonnes from 6.3 million tonnes in the first half of 2006. During the second half of the year, OCI is expected to add more capacities in Algeria, UAE and Iraq, thereby raising the group's total production capacity to 32 million tonnes per annum, up from the current 23. OCI trades at a price/earning (P/E) ratio of 25.7, compared to a market average of 15.7 times. HC Securities justifies the high P/E ratio compared to the market as a result of OCI's growth prospects in the region. This is coupled with the company's future revenue stream from new cement and fertiliser capacities, coming online in 2008 and 2009, respectively, which are not reflected in 2007 earnings.
