Weekly Stock Review: Global market trend ends one-day rebound

Sherine El Madany
7 Min Read

CAIRO: The Egyptian stock market slid to its lowest close in almost four months on the start of the week, dragged by banking stocks. It snapped its five-day losing streak on Wednesday, boosted by foreign buying on shares of Orascom Construction Industries (OCI).

However, it reversed its one-day rebound on Thursday, pulled down by negative global market trend. Overall, Egypt’s benchmark CASE30 index lost 1.2 percent to end the week at 9,950 points.

Sunday, the index tumbled 1.02 percent to close at 9,967.36 points on a low turnover of LE 973.6 million ($182.3 million), as banking stocks were still reeling after the government canceled the sale of Banque Du Caire.

Shares of Credit Agricole Egypt posted their sharpest single-day drop in more than three months, plunging 6.28 percent to LE 17.90. The stock has lost about 15 percent since the sale of Banque Du Caire was canceled.

Similarly, shares of Commercial International Bank (CIB) – Egypt s largest lender by market value – slipped 3.44 percent to LE 83.71. The bank has lost about 5 percent of its share value since Banque Du Caire’s auction postponement.

Shares of regional investment bank EFG-Hermes also closed lower on Sunday, dropping 1.44 percent to end the day trading at LE 50.56.

Blue-chip stocks also traded in the red on Sunday, as investors were cautious ahead of release of companies’ financial statements. OCI – Egypt s largest builder – shed 0.24 percent to LE 375.72 per share. Sister company Orascom Telecom (OT) lost 0.4 percent to LE 33, while El Ezz Steel Rebars sank 2.17 percent to LE 85.19.

Traders pointed out that investors usually unload shares by the end of each fiscal year. Monday marked the end of fiscal year 2007/08.

Shares of Heliopolis Housing – Egypt s largest housing developer by market value – bucked the trend, surging 6.8 percent to LE 447 on speculation it might split its stock. Egypt s regulator approved a five-for-one stock split on May 29.

The market extended declines on Monday for the fifth straight session, as the index dipped 1.4 percent to 9,827.28 points on a hefty turnover of LE 6.3 billion ($1.2 billion).

Shares of EFG-Hermes weighed on the index amid worry its earnings could be hit by Banque Du Caire’s auction cancellation. Shares of Egypt s largest investment bank sank 2.36 percent to LE 47.98, their lowest close in six weeks. The bank was hired to advise Saudi Arabia s Samba Financial Group, which pulled out of bidding for Egypt s state-owned Banque Du Caire.

Other banking stocks resumed their five-day losing streak, with Credit Agricole Egypt leading declines for the second straight session this week. Shares of Egypt s third-largest bank by market value plummeted 3.74 percent to end the day trading at LE 17.52.

Shares of CIB also stumbled 1.81 percent to LE 81.81 percent, while National Societe Genreral Bank (NSGB) edged 2.11 percent down to LE 37.15.

Shares of Heliopolis Housing bucked the trend for a second consecutive day, surging 7.1 percent to LE 478.87 to top the best performers list on speculation it would split its stock.

Shares of investment and brokerage company Pioneers Holding clambered for a sixth day since listing after a private placement. They jumped 28.45 percent to LE 21.76 on retail buying.

The market rebounded on Wednesday, reversing five sessions of declines, as foreigners grabbed shares of OCI.

The index rose 2.2 percent to 10,041.86 points on a turnover of LE 1.2 billion ($216.6 million). It had lost 5.5 percent since June 23 on negative sentiment towards Egypt s economy in general and banking sector in particular.

OCI was the market s most heavily traded stock by turnover, soaring 4.5 percent to LE 376.95. The stock has a weight of 30 percent on the index, so any upsurge in its price lifts the market, traders explained.

The stock rebounded after hitting a resistance at LE 360 and was also supported by its global depositary receipts (GDRs) in London, which triggered foreign buying.

Sister company OT also closed in the green, with its shares jumping 5.4 percent to LE 72.27. The region’s largest mobile operator said on Wednesday investors offered to sell 30 times the number of shares it offered to buy back in a tender.

Orascom – which had announced it wants to buy back its own shares because it has a large cash surplus and few investment opportunities – said investors offered to sell 356.7 million shares in the tender, which closed June 30. The firm previously sought to buy back 12 million shares at LE 83 per ordinary share and LE 415 per global depositary receipt.

Shares of Pioneers Holding surged for a seventh consecutive session, climbing 20.1 percent to LE 22.49.

The bourse quickly reversed its uptrend on Thursday, falling 0.9 percent to 9,949.93 points, mirroring international markets negative sentiment.

According to Reuters, a global sell-off knocked world shares to a five-month low on Thursday as surging oil prices fanned concerns about inflation and slowing growth, ahead of an expected euro zone interest rate hike and a key US jobs report.

Egypt’s stock market retreated on Thursday, as the global market trend weighed on blue-chip stocks led by OT.

Index heavyweight OT plummeted 3.7 percent to LE 67.50, while OCI dipped 1.8 percent to LE 370. Investment bank EFG-Hermes plunged 4 percent to LE 47.

Shares in Ezz Steel also closed in the red, stumbling 5.4 percent to LE 77 despite posting a record profit in the first quarter of 2008 that recorded 56 percent growth to LE 436 million.

Bucking the downtrend were shares of Pioneers Holding, which surged 18 percent to LE 26.90. The stock managed to attract investors for eight sessions in a row, extending gains to about 150 percent since June 24.

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