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A joyful Christmas and New Year spirit prevailed in the market, as proven by some indications of market recovery since the last week of November.

Purchasing orders from both locals and non-Arab foreigners notwithstanding, Arabs were net sellers in most of the most recent session, as blue chips helped the market break the 4,500 points level it had hit last week, and end Monday's transactions at 4,731 points, 28 per cent higher than its level on 24 November, a date which marked the market's lowest level in 2008.

The market will soon be receiving the results of the fourth quarter of 2008, which analysts expects to be negatively affected by the financial crisis and might weigh down on traded shares.

On the macroeconomic level, the year-on-year increase in Egypt's Producer Price Index (PPI) slowed down to 5.04 per cent in November, compared to 12.99 per cent in October and 33.7 per cent in June 2008. The index had been rising yearly since December 2007, when it registered 10.6 per cent on the back of higher commodity prices and economic growth.

On another note,the suez Canal Authority decided to keep transit tolls for passage through the Canal unchanged at their 2008 level. Traffic and cargo through the water passage have fallen in the last three months of 2008 as a result of the global financial crisis.

Ahmed Fadel , Chairman of the Canal Authority said that negative effect of the financial crisis started to show in December in particular and that it continues at its current rate, the number of ships and cargo going through the canal is expected to drop by 7% in 2009.The low traffic passing through the canal due to the slowdown in international trade with an international recession looming is not the Canal's only problem , as the piracy off the Somali coast through the last three months adding to its woes.

GIZA General Contracting and Real Estate Investment Company: The company signed a LE188.256 million contract with the New Urban Communities Authority to build 3,552 housing units, to be implemented in 30 months. The company chairman said it will start the construction as soon as it takes over the allocated site, which will be very soon. The company posted a 284 per cent increase in profits during the first quarter of 2008/2009 compared to the same period of last year.

Oriental weavers: The company announced that due to the global slowdown, the management is considering postponing half of its capacity additions in its new industrial complex planned to be operational in 2009 till 2010. Meanwhile, the company is pursuing its construction plans for the new complex, and three buildings have been completed to date.

Egyptian Company for Mobile services (MOBINIL): The company is to be granted a five-year syndicated loan of LE1 billion by Banque Misr together with 11 other banks. The loan, with a two-year grace period, will be used to finance the development of the 3G mobile service. The list of banks offering the loan includes the Arab-African International Bank, Banque du Caire and Arab Bank.

ORASCOM Telecom Holding (OTH): Company Chairman Naguib Sawiris said in an interview published on Monday that if liquidity abounds in 2009, more cash will be injected in African countries with low penetration rates. The company currently has activities in four African countries, namely Burundi, the Central African Republic, Namibia and Zimbabwe. Moreover, Sawiris said that about $400 million will be pumped into North Korea where his company is the sole service provider, based on obtaining a 25-year licence and a four-year monopoly. The company's negotiations to acquire i2 Mobile reached a deadend with OTH refusing to increase its offer to $350 million. Senior officials from OTH were quoted in local press as saying that the current financial turmoil hampered prospects for that deal.

Talaat Mustafa Group : The group announced plans to mull new investment opportunities including the acquisition of Grand Hyatt Hotel. However, it stressed that no decisions have been taken in this regard. In mid-December EFG-Hermes said it was placing a neutral short-term recommendation on TMG shares and long- term buy recommendations. Forecasts of sales slowdown and cautious estimates for current building costs amid the financial turmoil may have been responsible for this.

By Sherine Abdel-Razek

© Al Ahram Weekly 2009