CAIRO: After plummeting to an all-time low, shares of Talaat Moustafa Group (TMG) rebounded on Wednesday as news spread of its chairman’s arrest in a murder case.
Shares in Egypt’s largest listed real estate developer TMG witnessed heavy buying on Wednesday, one day after its chairman was arrested and charged with hiring a man to kill Lebanese singer Suzanne Tamim in Dubai.
“Shares bounced back mainly because the facts about the case were out, said Sherif El Sweify, technical analyst at Delta Rasmalla brokerage firm. “It is natural that whenever a rumor or major news is confirmed, shares in the company climb.
On Wednesday, shares in TMG leapt 4.48 percent to LE 5.60, after shedding around 24 percent in the previous two sessions as rumors of an impending indictment reached the stock market.
“The news took its toll on the market, and shares in the company plunged for two consecutive days. The worst has already happened, and it was normal to see a rebound today, El Sweify pointed out. “It’s a psychological effect that occurs in the market [after rumors are confirmed].
Egypt’s construction guru was referred to the Cairo Criminal Court Tuesday by Prosecutor General Abdel Meguid Mahmoud. Former police officer Mohsen El Sokkary was charged with killing Tamim in return for $2 million from Moustafa, a billionaire and a politician in the ruling National Democratic Party.
Following Moustafa’s arrest, the company appointed Tarek Talaat Moustafa as chairman and managing director on Tuesday to replace his younger brother.
Hit by news of its outgoing chairman, the company said on Wednesday all outstanding projects would be delivered on time. God willing, the dates of delivering the projects are still as they are, Tarek Talaat Moustafa told the Dubai-based Al Arabiya television by telephone. There won t be any effect from what happened.
The group comprises of 21 companies operating in real estate and tourism projects. The group also owns the Four Seasons brand hotel chains in Egypt. The newly appointed chairman defended his brother against the charges, saying the trial will prove his innocence, Reuters reported.
The group was listed on Egypt’s stock exchange last November in an IPO that was covered 41.4 times. Shares in the company ended their first trading day at LE 13.55, 23 percent above their IPO price.
In early trading on Wednesday, shares in TMG surged 21.27 percent before Egypt s regulator suspended trading on the stock for surpassing its daily limit.
“Trading was stopped for half an hour because the stock climbed more than 20 percent and that called for suspending trading on the stock as stipulated by rules of the stock exchange, explained El Sweify. “After that half an hour, trading on the stock resumed normally.
Shares of Talaat Moustafa Group, which fell nearly 50 percent this year to Tuesday s close, posted their sharpest jump in two weeks, lifting Egypt s benchmark index CASE 30 as investors searched for bargains after its stock tumbled.
These personal things usually have no impact on large institutions… so there s no impact on business, Tarek Talaat Moustafa told reporters at the group s headquarters in Cairo.
I think people trust this brand name, and to date there hasn t been a single incident of any of our (house) units being returned. The older Moustafa said the recovery of the share price showed investors trusted the new management.
The shares helped pull the CASE 30 index up 1.96 percent to 8,401.20 points.
The worst has already happened, Karim Hosny, trader at Pharos Securities, told Reuters. It s an asset-rich company and it s cheaper than other real estate.
Meanwhile, shares of Orascom Construction Industries, Egypt s largest building by market value, jumped 4.43 percent to LE 352.
The share has dropped about 28 percent since its year high of LE 485 on April 22.
The well watched Hermes index gained 1.43 percent to 730.98 points and the broader CIBC index climbed 1.67 percent to LE 403.68. -Additional reporting by Reuters.