EGX 30 Falls 3.94% In Week Amid Political Tensions
During the last week trading which started with Assiut train-bus fatal accident, the Egyptian Exchange has posted losses of around EGP 14.5 billion as the capital market has hit EGP 373.199 billion at the end of last week.
Egyptian Exchange benchmark EGX 30 index dipped by 3.94 % this week, representing a decline of 223.1 points, ending Thursday’s transactions at 5,439.29 points compared to 5,662.39 points at the end of last week.
Regarding current week trading, the index hit its highest point on Wednesday closing at 5,482.13 points, where its lowest point recorded on Tuesday at 5,409.89 points.
Safaa Fares, capital market technical analyst, said the Egyptian bourse has started the week amid high expectations of witnessing downwards due to the Israeli’s strikes against Gaza which resulted in withdrawing Egypt’s Ambassador to Israel. However, Saturday’s road/rail collision in the Upper Egyptian Assiut Governorate has severely affected the EGX indices. The recent clashes in Mohamed Mahmoud were also further factor in the mid- and small-cap index, the EGX70’s fall.
Main index EGX30 started week in hash slide and sunk by 3.25 to close at 5,478.38 points on Sunday. Market trade volume reached 101,125,617 shares amounted to EGP775,804,225.
EGX30 retreated by 1.18 % to close at 5,413.78 points on Monday. Market trade volume reached 149,194,481 shares amounted to EGP759,242,876.
EGX30 shrunk early loss and edged lower by 0.07 % to close at 5,409.89 points on Tuesday. Market trade volume reached 128,427,067 shares amounted to EGP939,059,568.
EGX30 reversed downside trend and advanced by 1.34 % to close at 5,482.13 points on Wednesday. Market trade volume reached 97,620,862 shares amounted to EGP523,043,506.
The index returned to red area after fluctuated performance all over the trading session and retreated by 0.78 % to close at 5,439.29 points on Thursday. Market trade volume reached 139,902,388 shares amounted to EGP887,190,701.
Due to the mounting death toll in Gaza as well as the current tensions in Mohamed Mahmoud street in Tahrir and the vague vision regarding the making of the country’s new constitution, the investors seem that they lost their appetite.
Companies’ Weekly Performance:
Orascom Telecom Holding – (ORTE.CA) closed last week at EGP3.73, while closed on Thursday at EGP3.62, dipping by EGP0.11 (3 %).
Stock highest close during the week came on Sunday closing at EGP3.64, while the lowest close came on Monday at EGP3.53.
On Sunday, Orascom Telecom Media and Technology Holding announced the completion of the negotiations with Orascom Telecom Holding (Global Telecom) (OTH) to sell its entire stake in Med Cable, its fully owned subsidiary.
OTMT added in a filling released Sunday that the two companies agreed the transfer by OTMT to OTH of Med Cable would come into effect at an enterprise value of Euro 12.3 million.
Beshara further told Amwal Al Ghad that suspending operations in Med Cable was due to disputes between OTMT and the Algerian government.
The Algerian government had announced immediately after suspending the operations in Med Cable that OTMT is using the cable for leaking the customers’ information. The CEO of OTMT added that the company cannot reap the benefits from the cable since halting its operations in Algeria. He said the continuous replacement, renewal and maintenance of the Med Cable lower its market value.
On Monday, Weather Investments, chaired by Egyptian telecoms magnate Naguib Sawiris, launched its $5 billion claim against Algeria for allegedly inflicting damages to stakes it owned in the Egyptian Orascom Telecom Algerie, most popularly known as Djezzy, Al Arabiya reported.
“The Algerian Government committed to a number of protections, including a promise to refrain from arbitrary interference in our operations, but has since 2008 pursued a campaign of interference and harassment which has cost Weather Investments over $5 billion in damages,” Sawiris said in a statement.
According to the statement released by Weather Investments, Algeria implicated breaches that range from imposing unjustified tax reassessments, a customs blockade preventing it from importing goods and network equipment, to imposing unjustified fines worth $1.3 billion among others.
“This is a bad development not just for us, but for all foreign investors in Algeria. The Algerian regime stands as a stark exception to a region which, on the whole, is beginning to engage global investors, pursue economic development and implement reforms attractive to the international business community,” Sawiris said.
Emmanuel Gaillard, head of Shearman & Sterling, the firm that is representing the Algerian government in the dispute, confirmed that Weather Investments initiated arbitration proceedings.
“We intend to vigorously defend the case. We think the claimant has no case,” said Gaillard, as quoted by Financial Times on Monday.
Gaillard explained that Weather Investment, as an indirect minority shareholder in Orascom Telecoms Algerie, cannot pursue the case.
“We don’t see any room for a treaty breach,” said Gaillard.
On Wednesday, Audi Bank downgraded, in a recent study, Orascom Telecom fair value by 10% from EGP 5.00/share to EGP 4.49/share and adjusted rating from BUY to ACCUMULATE as a reflection of the 26% upside potential from the current price.
Audi stated that, this lower fair value is the direct result of two main reasons, the first is lower EBITDA margins for DJEZZY and further overhang regarding the resolution, and the second is due to higher net debt position at the firm level (USD 2.98 billion as of Q3-12 vs. USD 2.67 billion as of Q3-11 utilized in our initial valuation.
Egyptian Financial Group – Hermes – (HRHO.CA) closed last week at EGP11.25, while closed on Thursday at EGP10.71 (lowest close), dipping by 5 % (EGP0.54).
Stock highest close during the week came on Sunday at EGP10.91.
On Monday, Hermes reported consolidated financial results posting a net profit of EGP232,089,765 for the period from 01/01/2012 till 30/09/2012.
Noting that, it posted net profits of EGP286,014,466 for the same period of the previous year.
Also on Monday, Hermes, the leading investment bank in the Arab world, released its consolidated financial results for the third quarter of 2012, reporting net income of EGP 45 million on total consolidated operating revenues of EGP 471 million.
Group revenues rose 19% Y-o-Y in 3Q2012, driven by an 18% rise in Investment Bank revenue to EGP 176 million, reflecting an increase in revenues booked by capital market and treasury operations in 3Q2012.
Commercial Bank revenue rose 20% Y-o-Y to EGP 295 million in 3Q2012, driven by growth in net interest income and trading income. In 9M2012, Group revenue rose 9% Y-o-Y to EGP 1.4 billion.
Revenues for the quarter split as 63% contributed by the Commercial Bank and 37% by the Investment Bank.
National Societe Generale Bank (NSGB) – (NSGB.CA) stock closed last week at EGP44.65, while closed on Thursday at EGP39.25 (lowest close), sinking by EGP5.4 (12 %).
Stock highest close during the week came on Wednesday at EGP41.35.
On Thursday, NSGB announced that it has purchased 15990 shares of National Bank of Egypt’s (NBE) stake in Sogolease Egypt Financial Lease.
NSGB added, in a release sent to EGX that, such stake reaches 19.99 % of Sogolease to hike its stake to 59.99 % of its capital.
Also on Thursday, Egyptian Financial Supervisory Authority (EFSA) announced that it has extended deadline of announcing Qatar National Bank – QNB tender offer to buy all shares of NSGB for 60 days starting from 27/11/2012 till 20/02/2013.
Telecom Egypt – (ETEL.CA) stock closed last week at EGP14.02, while closed on Thursday at EGP13.55, dipping by EGP0.47 (3 %).
Stock highest close during the week came on Sunday at EGP13.55, while the lowest close came on Tuesday at EGP13.05.
On Wednesday, Telecom Egypt announced that it is close to obtain an integrated telecom license which will benefit Egyptian telecom sector and the whole economy in general.
The company confirmed, in a release responding to EGX inquiries, its readiness to implement its strategy, which is coherent with its large base of subscribers, to transform to an integrated telecom provider.
Ezz Steel – (ESRS.CA) stock closed last week at EGP9.37, while closed on Thursday at EGP9.28, retreating by EGP 0.09 (1 %).
Stock highest close during the week came on Wednesday at EGP 9.3, while the lowest close came on Monday at EGP9.02.
On Sunday, Ezz Steel has regained one of two production licenses withdrawn by court order last year and is in advanced talks to secure the second, a company spokesman told Bloomberg.
The company, Egypt’s biggest publicly traded manufacturer of the metal, has paid 50 million pounds upon signing the Nov. 14 agreement with the Industrial Development Authority and will pay the government 330 million pounds more in five equal annual installments after an 18-month grace period, Kamel Galal, head of investor relations, said by phone.
The license is for Ezz Rolling Mills, a 99 percent unit of the company.
“The company has enough liquidity to pay this off so this is very positive for them,” said Heba Sherif, analyst at Prime Securities SAE who has a buy recommendation on the stock with a 12.8 pound price estimate. “It brings down their cost per ton because it reduces their reliance on imported scrap metal.”
Regarding 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 EGP88,998,378.
Arab investors chose also to buy by value of EGP13,683,553.
Foreign investors were most active sellers this week by the value of EGP126,778,592.
Retail & Institutions’ Activity:
Retail activity led the market all through the week as it ranged between 27.9 – 39.07 %.
While Institutions activity ranged during this week between 60.92 – 72.09 %.
Assiut Train-Bus Accident:
The Egyptian Exchange administration has observed a one-minute of silence for the children killed in Assiut train before starting its trading session on Sunday. About 51 young children were killed on Saturday when a train collided with their bus on a railway crossing in Manfalut, 356 kilometers (220 miles) south of Cairo.
The EGX has delayed its trading session of Sunday for a minute as it started at 10:31a.m. amid high expectations of witnessing downwards due to the current political scene including the Egyptian church and Wafd Party’s withdrawal from the constituent assembly to draft the country’s new constitution.
Ashraf Abdel-Aziz, head of institutional sales at Cairo-based Arabeya Securities, said the Egyptian market had also suffered from Saturday’s road/rail collision in the Upper Egyptian Assiut Governorate in which more than 50 children were killed.
In reaction to the tragedy, dozens of angry Assiut residents staged demonstrations to demand the local governor’s resignation.
