The market has been holding fast to the 5,000 points threshold it broke at the beginning of the last trading week of April, despite the adverse effect of swine flu fears on international markets. This relative immunity is seen by market experts as positive signs of recovery, further proven by the increase in average market daily turnover to around LE1 billion again, compared to half and sometimes one third of this figure over the last few months. On the macro-economy level, the Producers Price Index (PPI) declined by 10.2 per cent in March, compared to a decrease of 7.6 per cent in February, marking the highest year-on-year drop in the index since its launch in January 2007. The decline is mainly due to the high price levels of 2008 and the year-on-year drop in prices in the mining and quarrying fields, which have significant weight in the index. On a monthly basis, however, the PPI rose by 1.3 per cent, on the back of higher prices in agriculture and the mining, quarrying and manufacturing domains. Beltone attributed the monthly increase to wholesalers' rent-seeking behaviour, which has prevented a decline in domestic prices reflecting the drop in international commodity prices. The lead up to the Coptic Easter in April also served to maintain higher prices in March compared to earlier in the year. On another front, the growth in money supply (M2), measuring currency held by the public, plus savings and small time deposits, continued its decline to 6.9 per cent in March compared to the same month of the previous year. This is compared to an 8.5 per cent increase in February 2009 and its peak increase of 23.9 percent in March 2008. The decline was mainly due to lower growth in local and foreign currency deposits, similar to the trend in recent months. The figures of the Central Bank of Egypt also showed a slowdown in growth in credit to the private and household sectors in March. Growth in credit to the private sector dropped to 4.2 per cent, from 6.7 per cent in February 2009, the lowest growth in credit since May 2006, when it registered 3.5 per cent. Growth in credit to the household sector registered 22.7 per cent in March, down from 26.1 per cent in February 2009 and its peak of 31.2 per cent in August 2008. Slower credit growth reflects slower growth in the economy overall. THE EGYPTIAN COMPANY FOR MOBILE SERVICES (MOBINIL) posted a six per cent decline in net profits for the first quarter of 2009 to LE424 million. A statement released by the company attributed the decline to an increase in its interest payments through the quarter due to the increase in average interest rates from one per cent in the first quarter of 2008 to 13 per cent in the first quarter of 2009. Moreover, the company's debt burden rose during the quarter by LE1.8 billion, from which it has drawn down LE750 million in the three-month period ending 31 March 2009. Net revenues rose 10 per cent from a year earlier to LE2.49 billion, MobiNil said. MobiNil's subscribers base showed a 31 per cent rise year-on-year to 21,179,000, however the average return per user declined by 14 per cent to reach LE42 due to the effect of penetrating lower income market segments, lowering tariffs on calls between subscribers to its network and a reduction in roaming service revenues due to the slowdown in tourism. EL-EZZ STEEL REBARS increased the ex-factory steel price for the month of May by five per cent to LE3,200 per tonne compared to LE3,050 per tonne due to the increase in billets and scrap prices by 13.9 per cent and 9.5 per cent respectively in April. The move was imitated by all local steel producers and was quietly received by the market. CI Capital expects steel prices to show some minor increase over 2009. However, it said this would not affect dramatically the demand for El-Ezz Steel products, even while its prices might be higher than imported steel prices. El-Ezz has around a 60 per cent stake in the overall steel market in Egypt. ORASCOM CONSTRUCTION INDUSTRIES (OCI) held a general meeting last week and decided to split its Global Depository Receipts (GDRs), to reduce the ratio of ordinary shares to GDRs from the current ratio of 2:1 to 1:1 as a means to contain the arbitrage deals through which investors try to benefit from the differences between the price of local shares and GDRs. Moreover, the company decided to cancel all treasury shares it bought recently, amounting to 7.9 million shares. ARAFA HOLDING released its financial results for 10 months ending 31 January 2009 and showing a 14 per cent decline in net profits when compared to the 12-month period ending a year earlier, reaching $27 million. The release of a 10-month period figure only is due to the company's decision to change the end of its fiscal year from March to January. In addition to the fact that the released figure only reflects the performance of 10 months, the decline is attributed to high expenses as the result of retail acquisitions, in addition to the expenses of restructuring its British retailer BMB. The group is involved in restructuring and consolidating the operations of acquired entities, the most recent of which was the acquisition of 35 per cent of the Italian Forall Group, owner of the Pal Zileri brand.
