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Market Report: Egypt bourse gains 2.5 pct as profits optimism continues

Benchmark climbs again as investors take heart from last week's revival, fuelled by favourable profit results for the exchange's heavy-hitters

Ahram Online, Sunday 26 Feb 2012
Egyptian Stock Exchange
(Photo: AP)
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The Egyptian bourse saw further gains on Sunday as buyers continued to capitalise on the positive vibes of late last week, prompted by favourable financial results for some of the country's major firms.

The EGX30 benchmark extended Thursday's gains by a further 2.5 per cent to close Sunday's session at 5,270 points, pushing the index's year-to-date gains to 45 per cent.
 
"When the market gains significantly it creates a momentum that attracts fresh money," said Ashraf Abdel Aziz, head of institutions sales at Arabeya Online Securities. "This creates a surge of buying."
 
The EGX30 gained 2.46 per cent in last week's final session on Thursday, shrugging off moderate losses incurred over the previous two days.
 
The new gains were widely attributed to the release of encouraging financial results for two companies with high-cap, desirable shares, namely the Commercial International Bank (CIB) and Telecom Egypt (TE). 
 
Although neither reported strong profits, their results were more favourable than analysts expected given a year of political and economic upheaval.
 
Turnover on Sunday reached LE676 million (approx. $113 million), with Egyptian investors responsible for 81 per cent of trade. Non-Arab foreigners made up 14 per cent, a typical proportion given the weekend holiday, while Arabs fed 5.23 per cent of trade.
 
Construction materials and real estate were the sectors leading market growth, gaining 3.39 and 3.74 per cent respectively.
 
Egypt's largest listed firm, Orascom Construction Industries (OCI), saw its best day in weeks, its shares finishing up a further 3.64 per cent.
 
The performances of high-cap, once controversial stocks Ezz Steel, which gained 7 per cent to close at LE7.75 per share, and Palm Hills Development, up 8 per cent, helped pull the two sectors further into the green.
 
Property developer SODIC, which last week unveiled plans for four new mid-income housing developments, was the day's second biggest winner, up 8.7 per cent.
 
Non-banking financial institutions also rocketed an overall 4.77 per cent, driven by a surge of 7 per cent for shares in EFG-Hermes.
 
Gains were more modest for the telecoms sector, which has been the locomotive for market growth over the last few weeks following news of a sell-off of mobile operator Mobinil and the splitting of Orascom Telecom into two, separately-owned firms. 
 
On Sunday, the sector saw fledgling growth of just 0.37 per cent, weighed down by a mild loss of 0.63 per cent for Mobinil.
 
"It is very strange for Mobinil shares to lose value today," remarked Abdel Aziz, mentioning the promise of dividends for investors.
 
The mobile firm on Saturday released a statement, commenting on an article published in Al-Ahram daily newspaper which mentioned longstanding allegations about former employees transferring international calls for surveillance purposes. The company's statement reiterated its denial, citing the decision of Egypt's prosecutor general not to press charges.
 
France Telecom and Orascom Telecom Media Technology, the two main shareholders of the mobile venture, earlier in February reached an agreement that the former will offer a put option for 95 per cent of Mobinil's shares. 
 
France Telecom told Ahram Online on 18 February that the deal is expected to be concluded "within weeks". Those who pick up Mobinil shares
in the run-up stand to gain dividends of 15 per cent.
 
Abdel Aziz took the mobile operator's underperformance as a sign of market volatility -- and a suggestion that further dips may be to come.
 
"It's interesting Mobinil shares did not gain today," Abdel Aziz said. "The fact that other shares are gaining so rapidly for no concrete reason means that the market could over heat and drop value soon due to profit-taking."
 
Landline monopoly Telecom Egypt, whose reports of steady revenue helped fuel Thursday's gains, saw its stocks slip 0.19 per cent as investors looked elsewhere.
 
From the day's 184 listed stocks, 140 closed the day in the green and 30 lost value. Just four saw their values remain unchanged.
 
Yet again it was individual Egyptian investors who powered trade, being responsible for just under LE500 million of the day's turnover, and net-buyers to the tune of LE26.47 million. 
 
Non-Egyptian Arabs were the day's sole net-sellers, with foreigners scooping up LE7.2 million more in stocks than they sold.
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