CAIRO: Egyptian global depositary receipts (GDRs) are showing positive signs as a new week's trading began Monday on the London Stock Exchange. The stocks of Orascom Construction Industries (OCI), Egypt's largest GDR, closed at $41.97 Monday, up 26 percent from its lowest level of $33.29 on Jan. 31. The performance of the stocks improved after the events of that day, when Egypt's army said it will not use force against Egyptians staging protests, and a new cabinet of ministers was sworn amid promises of dialogue with all opposition forces. The next day, Mubarak declared he will not seek another term and leave office come September. Trading at $50.10 on Jan. 14, the OCI stock had began declining in the wake of events in Tunisia when the Jasmine Revolution led to the ousting of President Zine El Abidine Ben Ali. Egypt's Commercial International Bank also showed a positive performance closing at $6.33 Monday, up 13 percent from its lowest closing price of $33.29 on Jan. 31. EFG Hermes and Telecom Egypt (TE) closed Monday at $9.00 and $14.93, respectively, with EFG increasing by 16 percent and TE by 9 percent from $7.75 and $13.65 on Jan. 31. Commenting on whether the performance of GDRs could be a good sign for Egyptian stock exchange, Simon Kitchen, chief economist at EFG Hermes, said, “It is difficult to say because the GDR market is not practically liquid we may have seen a short squeeze which raised the prices.” He added that the performance of the EGX will depend on what happens in the next few days. “When Egyptian market opens, the scenario will be completely different,” said an analyst at Cairo brokerage firm. “There is no doubt that what happened with GDRs shows the foreign investors trust in the nation to rebuild so it is a good indicator, however there is a different dynamic when the Egyptian market opens because of retail investors, that make up a good chunk of the investment makeup,” he added. He said there was uncertainty whether these investors, who are mostly individuals, would remain in the market and that there was a chance they would take their money out. “The real question,” he said, “is whether institutions step in and start buying.” Angus Blair, head of research at Beltone Financial, told Reuters earlier this week, "If you look at the GDRs trading in London last week ... CIB opened at 6.10 and closed at 5.90. All the others rose during the week, all the other GDRS, so if they give an indication of demand it's likely that the stock market will see some selling but not as much as we might have assumed last week.”
