Market Report: Egypt blue chips suffer from foreign profit-taking

Ahram Online, Sunday 4 Mar 2012

Bourse closes down 1 pct in Sunday trading as foreign investors scramble to take profits on high-performing Egypt stocks

Photo: AP


Egypt's benchmark EGX30 index fell by 1.15 per cent in Sunday’s session to 5,308 points after blue-chip shares slipped on a wave of profit-taking by foreigner investors.

"Orascom Construction shares, for instance, sold at LE270 on Sunday after trading at LE243 only a few weeks ago,” market analyst Mostafa Badra told Ahram Online. “This prompted foreign investors to take profits.”

Foreigners accounted for 10 per cent of the day’s total turnover – an atypically large proportion for a Sunday, which falls on the weekend in the US and Europe.

Badra dismissed the suggestion that Egypt’s ongoing NGO controversy with Washington was behind the wave of foreign selling.

Egypt-US relations became even tenser last week after a government travel ban was lifted on 13 American NGO workers indicted for illegally operating in Egypt. The indicted foreigners’ departure from the country last Thursday infuriated Egyptian political parties and groups, who have decried perceived foreign pressure on Egypt’s judiciary.

Egyptian and Arab investors represented the day's primary buyers, scooping up a total of LE61.5 million and LE56.5 million in shares, respectively. Foreign investors, meanwhile, sold some LE4 million more than they bought.

Market heavyweights Commercial International Bank (CIB) and Orascom Construction Industries (OCI) declined in value by 1 and 2.6 per cent, respectively. Market bellwether Orascom Telecom (OT), meanwhile, fell by 1.4 per cent for the day, with Orascom Telecom Media Technology (OTMT) recording a similar loss of 1.2 per cent.

Palm Hills Development (PHD) reversed its rally on Sunday, dipping 2.1 per cent. The firm had seen suspiciously large increases in its share prices last week, prompting company officials to inform the exchange on Wednesday that they knew of no recent developments to explain the anomalous surge in share prices.

Sunday also saw three blue chips gaining ground, with Mobinil, EFG-Hermes and Talaat Mostafa Group rising by 0.6, 1.1 and 2.3 per cent, respectively.

"The surge in Hermes and Mobinil stock is linked to a market rumour that Hermes will be the broker responsible for the France Telecom deal with France Telecom," Badra said.

According to Ashraf Abdel-Aziz, head of institutional sales at the Cairo-based Arabeya Online Securities, Arabs tend to prefer investments in the real estate sector. "That’s why we found TMG shares – among few others – defying the EGX30 trend," he said.

The broader-based EGX70 index, meanwhile, closed the day up by 0.5 per cent on positive political news. "The announcement of a date for the election of Egypt’s constituent assembly is good news for investors,” said Abdel-Aziz.

In their first joint session on Saturday, the upper and lower houses of Egypt's parliament announced an official timeline for the formation of a constituent assembly, which will be responsible for drafting a new national constitution.

Of the market's 197 listed stocks, 56 finished up on Sunday, while 132 recorded losses in a day that saw a total daily turnover of LE641 million.

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