The market is led by its international peers with rare exceptions, a fact that was proven on Monday when the market lost almost 1.7 per cent of its value on the back of a steep decline in European markets, following news that the leading British Bank HSBC is issuing a private placement to collect $17 billion after incurring huge losses. The stock exchange launched this week a new broader stock price index titled EGX70 which will measure the performance of the 70 most active companies, excluding the 30 most active companies of the CASE30, now known as EGX30. Note that EGX30 will maintain the same constituents and calculation methodology of CASE30. EGX30 ended Monday's transactions at 3584.86 points, which is 22.01 per cent lower than its level at the start of the year. Thin transactions are dominating the market with Egyptian individual investors backing off in anticipation of any sign of the market stabilising or moving macroeconomic news, according to analysts. However, the vast majority of what investors are getting these days is bad news. Egypt's producer price index, reflecting the change in selling prices received by domestic producers for their output, dropped by 2.7 per cent in January, compared to January 2007. The fall was mainly due to the drop in price rises of items in agriculture and fishing, manufacturing, utilities and oil. However, the index inched 0.9 per cent upwards on a monthly basis, reflecting cement price rises through the month, in addition to the increase of costs of transportation due to problems with truck drivers through the month before they started their strike in February. EGYPTIAN COMPANIES FOR MOBILE SERVICES (MOBINIL): The court rejected MobiNil's claim against the ministers of investment and finance to redeem LE377 million. The sum represent taxes MobiNil has to pay for a five- year period. MobiNil says that it should be tax-exempted through the five-year period as the company moved its operations from Cairo to Sixth of October City. The court stressed that only companies that started operations 10 years ago in new cities are tax-exempted. EZZ STEEL REBARS: The country's largest steel producer lowered its ex-factory steel price for March by another LE350 per tonne to LE3,050 for March, with the retail price at around LE3,180 per tonne. Imported steel currently sells for LE3,100. While noting that the decrease was to be expected, due to the decline in global steel prices and the increased amounts of imported steel being sold in the market at lower prices, Beltone Financial expected Ezz Steel would continue to lower prices over the next few months given continued weak demand internationally and significant pressure from imports, particularly from Turkey. HOUSING DEVELOPMENT BANK: The bank started a due diligence process for the potential acquisition of a 60 per cent stake in the shares of UAE-based Damac's projects in Egypt. In the due diligence process HDB is representing itself for a potential stake of 30 per cent, the Egyptian Arab Land Bank for a stake of 20 per cent, and the Holding Company for Investment and Development for 10 per cent of the acquisition under-study, according to the Al-Mal newspaper. The project is one of Damac's three projects in Egypt and has a land bank of 1,500 feddans (6.3 million square metres) in New Cairo City. The project is named Garden Heights, and was previously known as Hyde Park. If the acquisition takes place, Damac Egypt's capital will be doubled. Moreover, the acquiring consortium will likely assume a 60 per cent share of Damac Egypt's debt of LE620 million, owed to the parent company in the UAE. GHABBOUR AUTO (GB AUTO): The company will enter into a joint venture with SENTRAX, an Algerian distribution network, to oversee the distribution of GB Auto's semitrailers in Algeria. GB Auto will invest $2.5 million for a 51 per cent stake in the venture, GB-Allab Remourque, over which it will have operational control. GB Auto expects to sell 600 units in the new company's first year, giving it an immediate 10 per cent market share. GB Auto may explore opportunities for greenfield projects in Algeria at a later stage, the company said. According to GB's press release, the agreement will also help it secure supply orders for its annual production capacity, which it grew by 300 per cent to 3,000 trailers in December 2008. HSBC-EGYPT: The bank published a prospectus inviting investors to subscribe to its LE100 million open-ended fund with a daily accumulated yield. The fund's capital is distributed over one million securities at a par value of LE100. Subscriptions starts next week and will last for a month. ARAFA HOLDING: The company signed an agreement to give up its management rights of Middle East Tailoring Company (METCO) to its partner Bagir. METCO is one of Arafa's apparel and tailoring subsidiaries and is 50 per cent-owned by Port Said Garments Company, 97 per cent owned by Arafa Holding. In addition to exclusive management rights, Bagir will be entitled to METCO's full profits and dividends. In return, Arafa will receive a fixed rent income from Bagir of $240,120 annually in addition to a variable rent equivalent to four per cent of METCO's annual sales, with a minimum of $800,000 for the years 2009 and 2010, and $1 million starting in 2011. Arafa believes this agreement will have a net positive impact on its consolidated earnings starting in 2009 due to higher rent income. Compiled by Sherine Abdel-Razek
