Egypt Stock Market Commentary – Week Ending November 18, 2011

Political uncertainty is taking its toll on the market yet again, this week taking a battering (-5.9%). The Egyptian pound traded at its lowest in nearly seven years, pushed down by concern about turmoil ahead of parliamentary election scheduled for 28 November 2011. Investors fear a flare-up of violence during the voting and are concerned the outcome will lead to a government keen to meet demands for social justice, leading to populist policies that could harm business interests, analysts commented. Islamist and liberal opposition began gathering in Cairo’s Tahrir square ahead of a rally to protest the military government’s plans to change the constitution to shield the army from legislative scrutiny. The protest on Friday is to reclaim power from the army and oppose a draft constitution, according to one activist.
In more positive news, Egypt will receive USD 200m to support its budget from the Arab Monetary Fund this month and a second tranche of financing worth USD 270m in December, according to Planning and International Cooperation Minister Faiza Abu el-Naga Egypt has received other budgetary support from Gulf States to help cover its deficit which has expanded since February’s uprising. In other positive news, revenue from Egypt’s Suez Canal rose 4.8% y/y to USD 447.9m in October, up 2.2% from a month earlier, a government portal showed.
In results updates, a number of companies released figures this week, including Dana Gas (3Q11 profit quadruples on higher production), Telecom Egypt (3Q11 net profit drops 21%, hurt by post-revolution downturn), Lecico (3Q11 net loss of EGP 3m), Juhayna (9m net profit up 7%), Talaat Moustafa (9m profit falls 43% y/y), Maridive (9m net profit down 14%), Orascom Telecom (swings to 3Q11 net loss), GB Auto (3Q11 net profit climbs 25% y/y), Eastern Company (1Q11 profit up 66% y/y), Nasr City Housing (9m profit falls 31%), CIB (3Q11 net income falls 20%), and EFG-Hermes (3Q11 profit drops 64%).
Lecico Egypt (+4.2%), despite announcing a loss, and Ghabbour Auto (+0.8%) emerged as the week’s only two gainers. Decliners were numerous this week. In the banking sector, CIB Egypt (-10.8%), EFG Hermes (-8.5%), and H&D Bank (-1.4%) fell notably, while in the construction sector, Egyptian Iron & Steel (-8.7%), El Ezz Steel (-7.7%), South Valley Cement (-4.5%), Orascom Construction (-4.0%), and Sinai Cement (-3.5%) were weaker. Palm Hills Development (-9.5%) and TMG Holding (-5.7%) fell markedly among the property developers, while Telecom Egypt (-5.2%), Orascom Telecom (-4.0%), and MOBINIL (-1.4%) dragged the telecoms sector downwards. Other key decliners in the market included Pioneers Holding (-12.5%), Canal Shipping Agencies (-10.4%), Maridive & Oil(-5.3%), Sidi Kerir Petrochemicals (-3.8%), and Elswedy Cables (-2.8%). Turnover in the market was also relatively light, however Citadel Capital (-4.9%) traded heavy volumes, and emerged as the top trader for the week after announcing the approval a USD 150m financing facility from U.S. Overseas development financing corporation (OPIC).

Source: African Alliance