Large Caps lead the way
Fundamentally sound stocks have helped push the market into record territory. The HFI and CIBC indices ended the period from June 15 to July 15 at new highs of 74786.07 and 348.19, a year-to-date performance of 22 percent and 19.8 percent, respectively. The period also witnessed the first IPO of 2007, GB Auto, an automotive stock, which started trading only on July 9.
No doubt, both Orascom Telecom Holding (OT) and Orascom Construction Industries (OCI), the top two companies in terms of market capitalization, impacted the market performance. OT acquired an additional 11 percent of its Pakistani operations and is among 11 operators short-listed for Qatar's second mobile license. Its stock closed the period 7.2 percent higher at LE 78.44. Meanwhile, OCI announced further investments in Algeria, Syria and, most recently, in North Korea. Its stock advanced 14 percent to LE 415.16.
OT's subsidiary Mobinil announced that it would finally acquire a 3G license, joining the ranks of its competitors, Vodafone Egypt and Etisalat Misr. Expected to launch in the fourth quarter of 2007, Mobinil will pay LE 3.4 billion for the license. The stock reacted positively to the news, increasing by 14.7 percent to LE 194.94.
Attention shifted to the banking sector following the government's decision to sell Banque du Caire, the third-largest public sector bank. Several banks saw their stocks advance as a result. CIB and NSGB, the two largest banks in terms of market cap, rose by 10 percent and 8 percent to LE 69.19 and LE 42.94 respectively. Suez Canal Bank was the top banking performer, closing 13.4 percent higher at LE 17.82, while Al-Watany Bank of Egypt, awaiting news of recent due diligence, added 4 percent to LE 47.15.
Certain real estate stocks made a comeback after a wave of profit taking. Heliopolis Housing & Development stock surged 50 percent to LE 620.28, while Alexandria for Real Estate Investment (AREI), developer of the Madinaty project in New Cairo, gained 32 percent to LE 450.30. AREI had announced a capital increase of LE 34 million through a 10-percent stock dividend. Also, SODIC recovered, rising 22.5 percent to LE 169.44 on the back of its inclusion in the Dow Jones CASE Egypt index and a LE 300 million deal with Citadel Capital subsidiary Bonyan to build a state-of-the-art design, furniture and accessories mall.
Elsewhere, El-Sewedy Cables is still going strong, advancing another 21 percent to LE 79.36, following news that it will establish a copper smelter in the free zone near Ain Sokhna in cooperation with Glencore International, which will own a minority stake. EFG-Hermes Holding made gains as it topped the turnover list. Renewed interest pushed its stock 16 percent higher to LE 50.05, a 14-month high. News that Olympic Group, the home appliances producer, might soon acquire El-Abd Industrial Company pushed the group's stock 12 percent higher to LE 65.
On July 5, the Central Bank of Egypt left interest rates unchanged as inflation slowed, at least for the short term. Inflation in June was just 8.5 percent, down from 11.7 percent in April. This helped support the stock market. The next period should see second-quarter results come out, which should ultimately have some bearing on stock performance.
Orascom Construction Industries
Orascom Construction Industries (OCI) continued to attract foreign investors with its evolving portfolio of construction, cement, infrastructure development and fertilizers. A total of LE 883 million worth of shares were traded over the period. The stock closed higher in 15 of the 20 sessions, up 14 percent at LE 415.16, having traded between a range of LE 360 and LE 444.99. During the period, OCI made several announcements, including plans to build a fertilizer complex in Algeria, which will consist of an ammonia/urea production unit of 1.1 million tons per year and a second ammonia production unit of 0.8 million tons per year. It also announced a greenfield cement factory in Syria with a capacity of 3 million tons. Back at home, OCI signed two new contracts with the Egyptian government worth LE 720 million to upgrade and expand two airports in Egypt. More recently, it revealed a 50-percent acquisition of a North Korean 2.5-million ton cement producer.
© Business Monthly 2007
