Weekly Stock Review: Egypt's CASE 30 ends week at four-year low

Sherine El Madany
7 Min Read

CAIRO: Blue-chips took the most points off the index last week after gloomy sentiment about the overall economy continued to dominate the market.

Egypt’s benchmark CASE 30 index – which lost 26.26 percent this year – touched a four-year low this week. Overall, the index plummeted 13.07 percent to end the week at 3,389.31 points.

A plunge in market mainstay Orascom Construction Industries (OCI) triggered local selling on Sunday, dragging the index 3.8 percent to 3,727.59 points. Trading turnover was in low volume of LE 347.1 million ($62.4 million).

Shares of OCI plummeted 5.44 percent to LE 106.02, painting the market red. Index heavyweight Orascom Telecom (OT) plummeted 6.4 percent to LE 21.20. OT did not buy back any of the 23 million shares it sought in the three months to the end of January, the stock exchange said.

Other telecom shares were dealt a blow with Mobinil shedding 2.79 percent to LE 132. Egypt’s fixed-line monopoly Telecom Egypt (TE) dipped 4.93 percent to LE 14.08 per share.

Big cap construction-related firms also took a pounding. Shares of Ezz Steel, Egypt’s largest steel maker, tumbled 10.56 percent to LE 7.54. Giant cable manufacturer Sewedy Cables saw its shares dive 6.52 percent to LE 50.02.

Shares of OT, the largest Arab mobile operator, skidded to their lowest close in more than four years on Monday after the company said it did not buy any stock during a planned buyback period.

The news weighed on the index, which slid 4 percent to 3,578.60 points, its lowest level since February 2005. Turnover was still trading on low levels of LE 494.3 million ($88.8 million).

Down 26 percent this year to Sunday s close, OT shares extended losses to a third straight session, slipping 12.96 percent to LE 19. The stock is the second-worst performers this year on the CASE 30 index.

Traders explained that investors were dumping OT shares because they thought the company s failure to repurchase any shares during a buyback period indicated the company thought the shares could drop lower.

OT said in November it planned to buy back 23.59 million shares between Nov. 2 and Jan. 30.

Selling frenzy swept across other blue-chips. Shares of Ezz Steel extended declines after HSBC slashed the firm s price target by more than four times on falling steel prices.

The stock sank 12.65 percent to LE 6.77. Ezz shares have tumbled about 20 percent since Jan. 28, when HSBC cut the firm to neutral from overweight, setting a price target of LE 10.7.

Shares of Mobinil, Egypt s largest mobile operator by subscribers, fell 3.99 percent to LE 127. The firm posted a record quarterly profit on higher mobile usage, but said earnings could slow in 2009 as Egypt s economy cools.

The index edged 1.89 percent lower on Tuesday to hit a fresh year low at 3,510.98 points.

Shares in regional telecom giant OT tumbled 4.02 percent to LE 19.59. The firm said on Tuesday it did not rule out a revived share buyback program and that excess cash could be allocated for dividends, buybacks or in debt reduction in the future.

Shares in Ghabbour Auto sank 6.41 percent to LE 10.95 after HC Securities resumed coverage of Ghabbour with a hold rating and said it was cautious on the stock due to rapid downturn in passenger car sales and market uncertainty.

The brokerage forecast a 23 percent year-on-year decline in Ghabbour s 2009 net income and a 14 percent decline in the company s net sales for the period.

Shares in OCI trimmed early market losses to end the day trading 0.69 percent lower to LE 103.02. Dealers attributed the OCI recovery to a turnaround in the GDR market that saw the London-traded shares climb to $36.50 after closing at $35.10 on Monday.

Bucking the downtrend were shares of Mobinil which gained 1.07 percent to LE 132. Investment bank EFG-Hermes said on Tuesday it was keeping its short- and long-term buy rating on the firm, and kept its long-term fair value at LE 217.7 per share.

The index rebounded on Wednesday after shares of Commercial International Bank (CIB) leapt on market expectations of strong full-year earnings.

The index gained 1.1 percent to 3,548.44 points on a below average turnover of LE 569.7 million ($102.7 million).

Shares in CIB, Egypt’s largest listed lender, climbed 7.31 percent to LE 33.60. Investment bank EFG-Hermes says it expects CIB to post a 7 percent increase in net profit for the fourth quarter of 2008 at LE 369 million. CI Capital research put the figure at LE 343 million.

Further boosting the market were shares of Mobinil, which rose 2.84 percent to LE 132.75 still benefiting from posting stronger-than-expected quarter results.

On Thursday, the market cut short its one-day uptrend after jumpy investors fled the market on a fall of new resistance levels. The index shed 4.48 percent at a four-year low of 3,389.31 points.

Total turnover was LE 534.9 million ($96 million), about half of the average before the international financial crisis started in September.

OT – the most heavily traded stock – saw its shares slip 9.19 percent to LE 17.20, its lowest close since September 2004.

Shares of Ezz Steel Rebars also closed in the red and inched 11.9 percent to LE 6.22, falling back to September 2004 levels.

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