Market Report: Egypt stocks bounce back 1.6 pct on Orascom hopes

Ahram Online, Tuesday 27 Mar 2012

Financial results and an imminent asset-split for the country's largest listed firm steer the exchange to its first overall gains in three days

Most Egyptian stocks see gains for the first time in three sessions (Photo: Reuters)

Egyptian stocks bounced back into the green on Tuesday as profit results from Orascom Construction, one of the country's largest companies, helped spur a minor buying spree despite ongoing political uncertainty.

The benchmark EGX30 made solid gains in the opening hour of trade before a mild retreat to close the session up 1.57 per cent at 4,985 points. 
The performances of select high-cap stocks fuelled the rally, with the broader EGX70 seeing a minor climb of 0.62 per cent.
"It's usual for a rebound after two days of major losses. It's good thing but we are not sure if it will last," Tarek Kafrawy, a senior trader at Cairo-based CIBC Brokerage, told Ahram Online.
"Clashes are making investors worred about the future of the market. We saw trade slip towards the end of the day. Buyers are not so powerful or aggressive."
The index slipped around 4 per cent on Sunday and Monday, rocked by an ongoing dispute between Egypt's ruling military and the Muslim Brotherhood, its most potent political force.
The political scene was further muddied on Tuesday when Egyptian liberals and leftists, wary of Islamist dominance on a new constitution-drafting committee, said they would write their own.
"The political issue is the main problem of the market," said Kafrawy. "Foreign and Egyptian investors are both looking for the same thing -- a settlement to all these problems."
From 181 listed stocks, 115 gained in value while 52 declined in the day's session.
Highest-profile gainer was Orascom Construction Industries (OCI), which on Tuesday announced net profits of $122.6 million for the fourth-quarter of 2011, around a third lower than for the same period the year before.
The results were less than most analyst estimates, but still greeted with relative cheer given the economic turmoil Egypt saw in 2011. The firm's focus on infrastructure, rather than residential real estate, and its blossoming fertiliser operations, helped shield it from a greater hit.
Stock in OCI finished the day up 1.97 per cent, with its position at Egypt's biggest firm by market capitalisation helping boost the entire index.
Perhaps more attractive to investors was OCI's imminent plan to split its current  assets into separate construction and fertiliser companies -- a move widely expected to
fuel interest in its stocks.
"Everyone saw what happened with Orascom Telecom," said Kafrawy, referring to the split of the telecoms giant last month, which saw the creation of two companies,
Orascom Telecom Holding (OT) and Orascom Telecom Media and Technology (OTMT). The latter, in particular, has seen large and sustained interest in its stocks.
Total turnover for the day was LE425.87 million ($70.55 million), with trade clustered around the Commercial International Bank (CIB), OTMT and OCI.
Investment bank EFG-Hermes, the only high-cap winner on Monday, continued to ride the news of a possible merger with a Qatar institution, with its shares closing up 4.24 per cent.
Other high-profile gainers were CIB, up 0.45 per cent, and Mobinil, which climbed 2.15 per cent.
Foreign investors were responsible for 37 per cent of trade, their biggest share for weeks, although they finished the day as modest net-sellers.
Political resolutions may be paramount, but changes in the three high-cap firms also have the potential to fuel optimism, said Kafrawy.
In addition to OCI's imminent spin-off, investors are still awaiting confirmation of the takeover of mobile operator Mobinil by France Telecom, and the long-awaited sale of OT's stake in Djezzy, another mobile firm, to the Algerian government."
"The main problem, though, is market volume," he said. "But how can we get more money invested in the market without certainty and security?"
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