Egypt Stocks Lose EGP15.2 billion in Week

In a week which witnessed the formation of Egypt’s new government alongside the regulatory approval on Sawiris-Beltone bid for a 20 % stake in EFG-Hermes, stocks lost 15.2 billion Egyptian pounds.

The main stock index, EGX30 sank by 4.6% throughout trading sessions of last week, registering a decline of 405.87 points, ending Thursday’s transactions at 8340.4 points compared to 8746.27 points at the end of a week earlier.

The main gauge index registered its highest point on Sunday closing at 8654.45 points, whereas its lowest point recorded on Thursday at 8340.4 points.

In addition, the mid- and small-cap index, the EGX70 pushed down by 3.1% closing at 589.59 points during Thursday’s session, compared to 608.42 points at the end of a week earlier. The price index, EGX100 also plunged by 3.11% concluding by 1037.2 points during Thursday’s session, against 1070.57 points at the end of a week earlier.

Furthermore, the market capitalization closed at EGP 480.62 billion last Thursday, compared to EGP 495.987 billion at the end of a week earlier.

Turnovers & Traded Volumes:

Through the week, the trading volume hit around 1.1 billion securities, compared to 1.9 billion securities at the end of a week earlier. For the traded value, it reached EGP 6.3 billion against EGP 7.6 billion a week earlier.

Sectors Activity:

Financial Services excluding Banks sector was the most active sector through last week, recording a volume of trades of 385 million securities worth EGP 1.049 billion.

Telecommunications sector came second, attaining a volume of trades of 330.4 million securities worth EGP 551.4 million.

Real Estate reported third, with a volume of trades of 104 million securities worth EGP 879.6 million.

Travel & Leisure sector was on the fourth position, getting a volume of trades of 90 million securities worth EGP 225.7 million.

Industrial Goods and Services and Automobiles came fifth, recording a volume of trades of 62.6 million securities worth EGP 163.9 million.

Personal and Household Products sector reported sixth, having a volume of trades of 48.2 million securities worth EGP 217.3 million.

Construction and Materials was on the seventh position, with a volume of trades of 29.6 million securities worth EGP 144.3 million.

Food and Beverage reported eighth, attaining a volume of trades of 23.8 million securities worth EGP 112.2 billion.

Basic Resources took the ninth position, with a volume of trades of 13.6 million securities worth EGP 166.4 million.

Banks reported tenth, recording a volume of trades of 7.4 million securities worth EGP 215.2 million.

Healthcare and Pharmaceuticals sector ranked eleventh, attaining a volume of trades of 4.7 million securities worth EGP 14.8 million.

At the bottom of the list, Chemicals reported twelfth getting a volume of trades of 2.7 million securities worth EGP 32.9 million.

Investors’ Activity:

Local investors led the market activity all through the week with 87.91%, followed by foreign and Arab investors with 6.33% and 5.76%, respectively, after excluding the deals.

Foreign investors were the most active buyers during the week earning the value of EGP 18.08 million, after excluding the deals.

Arab investors were to sell by value of EGP 39.05 million, after excluding the deals.

Moreover, institutions seized 58.27% of total trading through the week; while individuals attained 41.73%. Institutions were the most active sellers during the week earning the value of EGP 194.78 million, after excluding the deals.

Market Remarks

–         Etisalat, Emaar to Trade on Egypt Bourse in early 2015 – Official

Egypt’s stock market is concluding the procedures required to list UAE Etisalat’s Egyptian unit and Emaar Egypt by early 2015, said chairman Mohamed Omran.

Omran added in a statement to UAE AlBayan newspaper that listing of the two companies is linked to conducting the proceedings properly, because the official listing in the market requires a series of actions and plans taken by the company to comply with the listing rules and to accomplish success in the market.

The market regulator – the Egyptian Financial Supervisory Authority (EFSA) had been in talks with the two companies to reach a final agreement on listing their stocks in the Egyptian market early this year.

–         Egyptian Twinkies Maker Eyes Hiring Goldman Sachs for IPO – Sources

Edita Food Industries, the Egyptian snacks maker part-owned by buyout firm Actis LLP, is close to hiring Goldman Sachs Group Inc. (GS) to help manage its initial public offering, three people with knowledge of the matter told Bloomberg.

The company, whose products include the Twinkies cake in Egypt, may appoint a second bank to assist on the expected share sale in Cairo, the people said, asking not to be identified as the information is private. The IPO may be valued at about $300 million, according to the people.

–         Egypt’s Regulator Approve Sawiris-Beltone 20% Takeover of EFG-Hermes

Egypt’s financial regulator has approved a US$257 million joint bid by Beltone and billionaire Naguib Sawiris for a 20 % stake in EFG-Hermes, Chairman of the Egyptian Financial Supervisory Authority, Sharif Samy announced on Wednesday.

Samy told Amwal Al Ghad that all the required documents have been collected by the bidders, notably the guaranteeing paperwork that ensures the seriousness and solvency of the purchase offer financially and technically.

EFSA announced earlier that New Egypt submitted an optional purchase offer to acquire a 17.8% stake in Hermes, whereas Beltone Financial and Beltone Capital Holding seek a 1.09% stake each, whether in shares or global depository receipts (GDRs), valued at EGP 16 per share.

EFG-Hermes is one of the biggest investment banks in the Middle East, and a deal to buy a major stake in it would be seen as a sign of revival in Egypt’s equity market after years of depressed activity since the 2011 revolution.

–         EFG-Hermes hires HC as Independent Financial Adviser to Look at Sawiris-Beltone Bid

Egypt’s EFG-Hermes announced that it hired HC Securities & Investment as an independent financial adviser (IFA) to assess Beltone-Sawiris bid for 20% stake and to assist shareholders evaluate the attractiveness of the bid.

The company added in a press release on Wednesday that the results and board of directors’ opinion will be announced immediately after the completion of the report.

–         Beltone offers Itself for EFG-Hermes if bid completed successfully

The voluntary tender offered submitted by a consortium of business tycoon Naguib Sawiris and Beltone Financial Holding for a 20% stake in investment bank EFG-Hermes revealed that, upon acquiring the target stake, Beltone will offer EFG-Hermes to acquire it along with a subsidiary.
According to the tender offer, Beltone will make a proposal during the first year after acquisition for the target company (EFG-Hermes), including the acquisition of Beltone Financial Holding and Beltone Financial Portfolio Management.
The move will likely help Egypt’s investment banking sector grow significantly.

–         Russell Indexes to Reclassify Egypt As Frontier Market

The Egyptian equity market as measured by the Egyptian country constituent of the Russell Emerging Markets Index outperformed the Russell Emerging Markets Index and the Russell Frontier® Index since last year’s Russell reconstitution and year-to-date as of 13 June.

This positive performance has occurred as the nation deals with political uncertainty and assesses results of its recent elections.

Despite the relative political uncertainty in Egypt since the overthrow of President Mohamed Morsi in June of last year, the Egyptian country constituent within the Russell Emerging Markets Index has outperformed the Russell Emerging Markets Index and the Russell Frontier Index from the completion of the last Russell Indexes Reconstitution on July 1, 2013 through June 13 of this year. In fact, from July 1, 2013 through June 13, 2014, the Egyptian country constituent returned more than 76% and, in 2014 year-to-date as of June 13, it has returned nearly 28%.

–           Capital Gains Tax ‘Pivotal’ to Egypt’s Budget; Says Investment Minister

The capital gains tax on the stock market is pivotal to finance Egypt’s budget, said the newly-appointed Investment Minister Ashraf Salman.

The Egyptian official said the decision whether to adopt or delay the capital gain tax is in the hands of Egypt’s Cabinet and Ministry of Finance.