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MARKET WATCH
WHAT A HOT SUMMER!
The period from June 15 to July 15 was definitely a hot one, in
terms of the weather in Cairo and the atmosphere in the Cairo stock
exchange. Both indices continued to advance, the broad-based
HFI Index climbing 10.17 percent to 42952.58, while the broader
CIBC Index added 4.67 percent to 143.16. Yet, the former has a better
year-to-date story with the HFI index almost 80 percent up for the
year 2005. As expected, once the recent two IPOs, Raya Holding and
Sidi Krir Petrochemicals (SIDPEC), were floated, the dust settled
and investors rebalanced their portfolios as a result. Another interesting
point during this period is that the number of advances surpassed
the declines once again, having been outnumbered for three consecutive
periods.
The star performer this period was SIDPEC with a 47-percent increase
to £E 102.60. Investors started to pay attention to the
rest of the market once the wave of profit-taking began to subside. EFG-Hermes
sprang up once again as one of the best performers, increasing 30
percent to £E 41.76.
In the cement sector, all listed companies advanced with the exception
of only two companies. National Cement and Alexandria Cement saw
their stock prices slip versus the previous period. Meanwhile,
Amreyah Cement and Torah Cement were the top two gainers exhibiting
a double-digit performance, increasing 23 percent and 11 percent
respectively. National Cement, being the last government-controlled
company, is still selling at relatively lower prices versus other
foreign-controlled companies, which might explain its lagging performance.
The stock of Orascom Construction Industries (OCI), which owns Egyptian
Cement Company (ECC), also increased 22 percent to £E 176.31.
Meanwhile, Al-Ezz Steel Rebars’ stock price shot up 20 percent
to £E 28.74.
On the other hand, speculators find Arab Cotton Ginning ripe for
their favorite roller coaster rides, with the stock coming back
from below, up 20 percent to £E 7.97. The company had just
closed subscription for the uncovered portion of its capital increase
Another speculators’ favorite is Egyptian Media Production
City, whose stock price stayed virtually unchanged at £E 10.
As for the telecom market, both local mobile operators increased
in value, with Vodafone Egypt leading with an 11-percent performance
vs. MobiNil’s 7.5 percent. The two companies were due to announce
their three-month results in late July, early August. Meanwhile,
Orascom Telecom (OT), MobiNil’s parent and regional mobile
operator, saw its share fluctuate between £E 530 and £E
600, only to settle at £E 589.38, up 6 percent for the period,
yet 5 percent off its lifetime high of £E 620. OT has
announced that it signed an agreement to acquire the remaining stake
in Iraqna, its Iraqi mobile operator.
In the months leading to Egypt’s 2005 presidential elections,
many investors believe stocks will be in an upturn trend, especially
if second calendar quarter results coming out soon beat expectations.
Both large and small caps are expected to lead the market this period,
with more focus on small caps.
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ANALYZE THIS
Compared to Raya Holding and exhibiting a better performance
as a new issue on the block, Sidi Krir Petrochemicals (SIDPEC)
shot as high as £E 125.45 on its fourth day of trading,
79 percent higher than its IPO price of £E 70. The stock
performance was muted in the first couple of days following
its IPO on Thursday June 23 as the price limit was not lifted
till the following Monday, June 27. The highest level
reached was on the following day from which the stock turned
south to as low as £E 95.30, 24 percent lower than its
high, as individual investors were reaping their profits.
However, the stock pulled back higher to close the period
at £E 102.60, still 47 percent higher than its IPO price,
declaring itself as a strong stock to watch. By all means,
the SIDPEC IPO qualifies as a “hot issue.”
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