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Still in charge

A week after the expiry of the subscription period in both its IPO and private placement, SIDPEC continued to direct market movement
"The extra funds investors initially saved for Sidi Krir's IPO, which turned out to be less attractive than anticipated, was used up at the beginning of the week, forcing investors to profit take in the middle of the week." This is how the HC securities report described the market during last week's transactions.

The way things went with the SIDPEC offering was disappointing as stipulating minimum lots of 1,000 shares for subscribing in the IPO limited the number of investors capable of buying the shares. Moreover, 94 per cent of the shares sold through the private placement were snatched by a Saudi investment house, Naeem.

Disappointed investors, however, dove back into the market, cashing in on the range of blue chips, driving up prices through most of the days of the week, reaching its peak by the end of the trading week on 23 June which witnessed SIDPEC debut trading on the Stock Exchange Market at an opening price of LE77.45 per share.

A clear indicator of the week's activity was the overall higher than usual Cairo and Alexandria Stock Exchange (CASE) turnover of LE2.74 billion.

Sunday and Monday transactions was mixed and the market ended in negative terrain.

SIDPEC's first day of transactions witnessed frenzy buying, pushing the share up and hitting the ceiling of the permited five per cent upward movements. This very limited movement was believed to be why bourse authorities decided to exclude SIDPEC from the five per cent price limits starting Monday.

Only 36 of the listed companies currently enjoy movement of their shares up and down within a 20 per cent limit. Transactions on the rest will be suspended if it exceeds a five per cent north or south opening price.

Moving to other traded stocks, the week's most active was Orascom Construction Industries (OCI) with a turnover of LE295.59 million.

No surprise that the market gauging Orascom Telecom (OT) had the second largest turnover, worth LE258.44 million. Weather Investments , the new 50 per cent owner of OT, succeeded in securing a loan for acquiring Italy's Wind.

Deutsche Bank, ABN AMRO and Sao Paolo IMI will partly finance the 12.1 billion euro deal by extending Weather Investments a 9.3 billion euro loan.

A part of the loan will be used to refinance Wind's outstanding debt while the remaining 1.75 billion euros will be used to supplement the financing of the acquisition. Moreover, OT seems to be planning to enter the fixed lines business as well. It is competing with Spain's Telefonica and Moroccan local firm Maroc Connect to build a fixed-line network in Morocco.

The GSM double headers Vodafone and ECMS performed exceptionally well. Vodafone announced its upcoming dividend distribution which surged its stock price by 11.49 per cent to end the week at LE89.01. MobiNil leapt 9.65 per cent to close at LE191.12. MobiNil signed a cooperation pact with the International Finance Corporation (IFC), an affiliate of the World Bank, to develop and train personnel of the company's local small- and medium-scale customer enterprises.

Al-Ezz Steel Rebars was among the best performing stocks, shooting up 21.58 per cent to end at LE29.02. This came in the wake of the very positive first-quarter results posted by the iron and steel producer ANSDK which is 21 per cent owned by Al-Ezz Steel Rebars. Also, the recent drop in international steel prices has affected Al-Ezz's cost of raw materials.

Banking sector sentiments were high amid a wave of acquisition activity. The four bidding proposals on the acquisition of Banque Misr's stake in MIBank were due at the end of last week.

Also, Egyptian Commercial Bank (ECB) secured a deal with the Greek Bank of Piraeus which acquired 69 per cent stake in ECB at LE133.42 million. The Greek bank had put forth an acquisition offer earlier in May setting as a condition the inclusion of at least 70 per cent of ECB's issued capital before going ahead with the deal. The deal was executed at a LE21 per share versus its LE12.84 trading price at week's start.

On the privatisation front, the Housing and Construction Holding Company received no offers to acquire the public stake in Nasr City Housing, estimated at 32.98 per cent. The deadline set by the Holding Company to present offers was Monday.

News from the broader macro-economic level was encouraging. According to Prime Securities weekly market review, the World Bank's board discussed a proposed country assistance strategy for Egypt covering the next four years (2006- 2009) with expected aid in the range of $2-2.8 billion. The aid shall be directed towards supporting enhancements in various sector reforms including infrastructure, education, poverty alleviation and the financial sector. "Generally speaking, the proposed strategy shall support the Egyptian government's goal to fight poverty by focussing efforts on areas where the World Bank's contribution will achieve results, such as improving the investment climate and enhancing economic, social and financial reforms," said the report.

© Al Ahram Weekly 2005