Benchmark Surges 1.3% in Week, As Egypt Forms Its Cabinet
As Egypt was in the process of forming its military-backed interim government, the country’s stock market has posted gains of EGP 2.1 billion in a week.
The capital market has closed at EGP 356.199 billion on Thursday, compared to EGP 354.060 billion a week earlier.
The interim government comes in the light of a road map drawn by the Egyptian military to lead the country’s transitional period amidst the ouster of the brotherhood-backed president Mohamed Morsi on July 3rd.
Egypt’s Post-Morsi Cabinet
After talk of a swearing in on Wednesday morning, in the usual rushed fashion, thirty-four ministers were sworn into Egypt’s cabinet on Tuesday afternoon. While many of the names floated over the past few days have remained the same, a few changes have been seen, along with some last-minute withdrawals. Most notable in the interim cabinet is the complete absence of any Islamist members, and the appointment of Minister of Defense Abdel Fattah al-Sisi as a deputy prime minister.
The cabinet also includes several holdovers from Kandil’s most recent cabinet – among them the ministers of interior, electricity and and tourism. There are others who were replaced in the May 2013 reshuffle including Dr. Ashraf al-Araby, serving as minister of international cooperation and planning, who now returns as the minister of planning. Mounir Fakhry Abdel Nour, who served as a minister of tourism in Ahmed Shafiq’s cabinet, and refused a post in the Morsi government, returns as the minister of industry. Only three out of thirty four ministries are headed by women – the ministries of health, environment and information, while the latter could be scrapped. The ministry of culture was also to be headed by a woman, namely Enas Abdel Dayem, the head of the Cairo Opera House who was sacked by Muslim Brotherhood minister, Alaa Abdel Aziz, but she withdrew her acceptance at the last minute.
With no Islamists swearing in on Tuesday, the interim cabinet is composed entirely of liberal, independent and technocrat members. In fact, several of the candidates accepting positions in the Beblawi government turned down similar offers to join the Kandil cabinet. At the time, Emad Gad of the Social Democratic Party, for example, said that his party refused positions in the cabinet because they wanted to leave the burden of responsibility entirely with the Muslim Brotherhood, and its Islamist allies.
Indices’ Weekly Performance:
Egyptian Exchange’s benchmark EGX 30 index inched up by 1.32%, representing an increase of 69.88 points, ending Thursday’s transactions at 5346 points compared to 5276.73 points at the end of last week.
Regarding current week trading, the index hit its highest point on Tuesday closing at 5358.92 points, where its lowest point recorded on Sunday at 5308.85 points.
Meanwhile, the mid- and small-cap index, the EGX70 fell by 0.9% closing at 425 points during Thursday’s session, compared to 429 points.
The price index, EGX100 also retreated by 0.27% concluding by 732 points during Thursday’s session, compared to 734 points at the end of a week earlier.
Through last week sessions, the market witnessed a decline in its trading volume which reached 442 million securities on Thursday, compared to 748 million securities a week earlier, worth EGP 1.489 billion, against EGP 2.157 billion a week earlier.
Companies’ Weekly Performance Highlights:
Orascom Construction Industries – (OCIC.CA) closed last week at EGP 245.13, while closed on Thursday at EGP 249.39 (highest close), jumping by EGP 4.26 (2%).
Stock lowest close during the week came on Sunday at EGP 247.87.
On Friday, OCI’s Contrack International Inc., a McLean,Va.-based construction company, has agreed to pay the U.S. government $3.5 million to settle allegations that the company submitted false claims related to U.S. Agency for International Development water and wastewater project contracts in Egypt in the 1990s, Engineering News Record reported.
The Dept. of Justice, which announced the settlement on July 12, said bidders for the contracts were required to be precertified and, in some cases, show that they were U.S. companies.
Thus, the U.S. alleged, Contrack and the other firms in the JV received contracts for which they were not eligible.
The settlement agreement, which DOJ and Contrack officials signed on July 11, states, “Contrack expressly denies the allegations of the United States…and denies that it has engaged in any wrongful conduct in connection with the covered conduct.”
DOJ said, “The government is continuing to pursue its claims against the other two defendants in the [2004] suit.”
On Monday, Egyptian tycoon Naguib Sawiris, whose family controls the sprawling Orascom corporate empire, says he and his brothers will be “investing in Egypt like never before” after the ousting of a president he accused of bullying opponents to his rule, Reuters reported.
The eldest of three billionaire brothers, Sawiris spent much of the past year in self-imposed exile, returning to Egypt in May after officials cleared OCI, run by brother Nassef Sawiris, of tax evasion.
“My family and myself are going to be investing in Egypt like never before – any new projects where we can invest, any new factories that we can open, any new initiatives that will provide jobs for the young people of Egypt,” he said, although he did not give any specifics.
“My family actually paid the price of my challenge,” he said, citing what he called an “unlawful” tax imposed on OCI as it was moving its listing from Egypt to the Netherlands.
“They were bullying us. They were bullying me, they were bullying my family they were bullying … any businessman who dared to stand in their way,” he said.
Also on Monday, OCI N.V. announced that Sorfert Algérie, a 2 million metric ton capacity Greenfield nitrogen fertilizer complex owned by OCI in partnership with Sonatrach, has restarted operations on train one and has begun commissioning works on train two.
Commercial production is expected to commence in August 2013 with exports following suit by the end of the month.
Sorfert was established through a 51/49 OCI S.A.E. and Sonatrach partnership in 2006, with OCI acting as lead Engineering, Procurement, and Construction (EPC) contractor and Uhde providing the plant’s state-of-the-art process technology.
Sorfert is capable of producing 1.36 million metric tons per annum (mtpa) of granular urea and 0.8 mtpa of merchant anhydrous ammonia.
On Tuesday, The Dutch-listed parent company of Egypt’s OCI said a quarter of the remaining other shareholders in the Egyptian company had so far accepted its offer to acquire their shares, Reuters reported.
The parent company, OCI NV, already owns about 75 percent of OCI’s Cairo-listed stock. The tender offer is likely to lead to the delisting of OCI, one of the country’s biggest companies, from the Egyptian stock exchange.
OCI NV has said its Amsterdam base gives it greater access to international capital markets.
OCI NV launched the tender in June, offering Dutch-listed shares or 255 Egyptian pounds ($36.41) in cash for each ordinary Egyptian share. The offer ends on July 28.
“As it stands, 11,568,700 shares, representing 23.05 percent (of the 50 million shares on offer) have elected to convert into OCI N.V.,” OCI NV said in a statement. Almost 3 percent had opted for the cash offer.
OCI NV had offered a cash alternative of 280 Egyptian pounds per share in January but reduced the offer in May without giving a reason. The stock traded at 248.23 pounds on Tuesday.
The original tender was held up by a tax dispute that led the government to place a travel ban on OCI’s Chief Executive Nassef Sawiris and his father Onsi. The Egyptian regulator also sought clarifications that held up the deal.
The tax dispute was settled in April when OCI agreed to pay the government 7.1 billion Egyptian pounds ($1.01 billion). The travel ban was then lifted.
On Wednesday, OCI N.V. announced that the OCI has been awarded several contracts in Egypt valued at a total of EGP 1.5 billion.
These contracts, part of which will be paid in foreign currency, cover a number of sectors such as power, healthcare and transportation, and were awarded by both private and public sector clients. Among the new awards are Phase II of Dar El Fouad hospital and a 500 megawatt power plant in Six of October City.
OCI Construction Group Chief Operating Officer, Osama Bishai, commented: “OCI continues to secure high-quality work of significant size during this challenging transitional period in Egypt, and yet we remain selective in the projects that we pursue in order to minimize counterparty risk.
Our ability to maintain human resources and mobilize effectively once sizeable projects are secured makes us the contractor of choice for many of our clients. OCI is excited to build on its integral role in driving business activity and employment in Egypt, and we look forward to contributing to the economic recovery.”
On Thursday, OCI’s BOD approved OCI N.V. tender offer to buy OCI all shares.
Moreover, it approved the independent financial adviser valuations as it sets company’s fair value at EGP 235.49 per share which is lower than tender offer price by 8.28 and hence it is fair deal.
Amer Group Holding – (AMER.CA) closed last week at EGP 0.54, while closed on Thursday at EGP 0.51 (lowest close), dipping by EGP 0.03 (6%).
Stock highest close during the week came on Sunday at EGP 0.54.
On Thursday, Amer asserted that the land which Porto 6th October was established at is owned by Kuwait Wadi Elnile Urban Development Company (KUWADICO) the company that Amer signed development contract of Porto.
It is worth noting that, New Urban Communities Authority (NUCA) warned citizens to buy or deal in Porto October project which executed by Amer Group.
Amer added, in a release sent to EGX that, it signed development contract of Porto with KUWADICO at 1.3 million square meters in 6th of October City in 2012.
Amer stated that NUCA neglected, in purpose, to mention that the land is owned by KUWADICO adding that it would take all required legal procedures to preserve its rights.
Telecom Egypt – (ETEL.CA) closed last week at EGP 12.78, while closed on Thursday at EGP 13.35, jumping 4 % (EGP 0.57).
Stock lowest close during the week came on Tuesday at EGP 13.79, while the lowest close came on Sunday at EGP 13.18.
On Tuesday, an official source in Ministry of Telecommunication and Information Technology denied news of Telecom Egypt’s intentions to sign interconnection deal with Etisalat Misr, Youm7 reported.
The source, who declined to mention his name, stated that there are 6 points must be set before granting 4th operator including interconnection deal with Etisalat Misr.
On Thursday, Telecom Egypt announced that it has signed interconnection pact with Etisalat Misr in order to offer integrated license.
The company added, in a release sent to EGX that, it was conducting talk with Etisalat Misr and signed the deal on Wednesday 17/07/2013.
It is worth noting that, Minister of Telecommunication and Information Technology Atef Hamed told Andolu News Agency that Telecom Egypt will sign interconnection deal with Etisalat Misr.
Investors’ Activity:
Local investors led the market activity all through the week, followed by Foreign and Arab investors respectively.
Local investors were the most active buyers this week earning the value of EGP 138,617,386.
Arab investors chose also to buy by value of EGP 9,995,517.
Foreign investors were most active sellers this week by the value of EGP -148,612,904.
