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Thursday, 29 July 2021

From the trading floor

The coronavirus-induced meltdown in the international markets seems to be contagious, and the Egyptian bourse has been showing symptoms of heavy losses

Sherine Abdel-Razek , Sherine Abdel-Razek , Tuesday 10 Mar 2020
From the trading floor
From the trading floor

The market extended its week-long losses to reach its lowest point since October 2016 on Monday. The 7.3 per cent loss in the benchmark EGX 30 index was the highest one-day drop since 2012, bringing losses in the year to date to 21.3 per cent. While transactions were suspended for half an hour after the index lost five per cent, according to bourse rules, several blue-chip stocks dipped by around 10 per cent amid heavy selling.

The losses have pushed several companies to buy back shares in order to protect them from further declines. They include Orascom Development Egypt (ODE), Raya Holding, Egypt Kuwait Holding (EKH), GB Auto, Palm Hills, and Arabia Investments, which announced over the past few days that they were planning buybacks over the next few weeks in a bid to hedge against the current market volatility caused by the Covid-19 outbreak.

The buyback decisions also came in the wake of new regulations making payback procedures easier.


Banque du Caire: The state-owned bank is expected to be put up for sale through the stock market next month, with the offering expected to comprise 20 to 30 per cent of the bank.

The bank was planned to be offered last year, but the emerging markets crisis as well as Saudi Aramco’s gigantic initial public offering (IPO) put the plan on ice. The timing of the offering this time round has been overshadowed by fears of the effect of the coronavirus on the markets.  

Bank CEO Tarek Fayed said in a press conference earlier this week that it was too early to assess the impact of the virus on regional and international markets on the success of the offering. He added that the bank’s management was ready to change its timeline according to developments.

Government sources and bank officials participating in two roadshows to measure interest in the bank in the US, the UK, and Dubai said that there were at least three major investors expressing their interest in the offering. They include the European Bank for Reconstruction and Development, the Sovereign Fund of Egypt, and the Abu Dhabi Development Holding. 

Fayed has previously noted that no investor would be granted more than a five per cent stake in the bank.


Madinet Nasr for Housing and Development (MNHD): The real-estate developer plans to sell land in its development in the New Cairo compound Taj City to the real-estate developer Minka for LE1.15 billion.

Minka will build fully-finished residential units on the 114, 500 square metre plot of land. MNHD does not offer such fully-finished units in Taj City. The sale is a part of MNHD plans to liquidate part of its land holdings. The new investment is MNHD’s second in Taj City after the Hoft, commercial, residential, and administrative units built on a 3,400-square-metre plot of land. 

MNHD also plans a new bond offering this year to a total value of LE2 billion. It comes after MNHD offered LE305 million worth of bonds earlier in 2020 to fund expansion.

It will also acquire a LE2.1 billion loan from a consortium of banks including the National Bank of Egypt to finance its Sarai project located on a total area of 5.5 million square metres of land next to the New Administrative Capital.

MNHD plans to deliver a total of 2,500 units in two mixed-use projects in East Cairo — Taj City and Sarai — in 2020.


Telecom Egypt (TE): The state-owned fixed-line monopoly and mobile-network operator has not yet reached a decision concerning buying the remaining 55 per cent stake it does not own in Vodafone Egypt.

Saudi Telecom (STC) has started due diligence work on acquiring Vodafone Egypt, having expressed an interest in the 55 per cent stake for $2.4 billion, which puts the total value of Vodafone Egypt at $4.4 billion.

STC might have to submit a tender for the 45 per cent stake owned by TE, according to local media reports quoting sources from the Egyptian Financial Regulatory Authority (EFSA), the non-banking financial market regulator.


Qalaa Holdings: The private-equity group has contracted advisory firm Grant Thornton to decide on the fair value of shares in Taqa Arabia ahead of the latter’s IPO scheduled in the second quarter of 2020.

Sources close to Qalaa said it could offer a 25 per cent stake in Taqa at a value of $1-1.2 billion, but a final determination would be made following Grant Thornton’s assessment.

The news comes within the framework of Qalaa’s decision last year to list a number of its subsidiaries this year. The group’s co-founder and chairman, Ahmed Heikal, had previously said that Qalaa planned to take all eight of its existing subsidiaries to market before 2023.

*A version of this article appears in print in the  12 March, 2020 edition of Al-Ahram Weekly


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