The negative sentiment that the recent NDP-approved measures have thrown on the market weighed down on its index for the second week in a row, with the CASE30 losing 11.9 per cent of its value in the five trading days ending on 15 May. CASE 30 concluded the week at 10,169 points. The total market capitalisation according to the CASE weekly report shed LE70 billion to reach LE804 billion. This came despite a handful of companies posting exceptionally good through the week, and some positive economic indicators being revealed. The cabinet released a statement noting that the economy grew by 7.5 per cent during the first quarter of 2008; the real GDP for the quarter was LE226.5 billion. According to the official statement, growth was led by tourism which increased by 23-27 per cent, Suez Canal revenues which rose 19 per cent, construction which rose by 15-15.5 per cent, and communications which rose by 13-15 per cent. Moreover, the Suez Canal Authority (SCA) said that the revenues reached $449 million in April, the first month of a new tariff increase, compared to $366 million in April 2007. Revenue in March was $417 million. The SCA decided in December 2007 to raise the cost of transiting the waterway by an average 7.1 per cent starting April 2008. COMMERCIAL INTERNATIONAL BANK (CIB) terminated its nine-month-long negotiations with the Arab African International Bank (AAIB) over a potential merger. The bank said in a release sent to the Stock Exchange that it was not able to reach agreement with AAIB shareholders, and that the lengthy negotiations were distracting it from considering other potential opportunities. It is rumoured that Kuwaiti investors, represented by the Kuwaiti Investment Authority which owns 49 per cent of AAIB, have been halting merger discussions since they favour a potential merger with a Kuwaiti bank. The Central Bank of Egypt (CBE) owns 49 per cent of AAIB. On another front, CIB reported a 66 per cent increase in its net profits for the first quarter of 2008, to reach LE440.8 million. According to EFG-Hermes, the results included a number of one-off items related mainly to provision write- backs and capital gains from the sale of investments. These items alone added LE28 million to the bottom line. Loan growth picked up by 15 per cent through the quarter, with corporate lending being the main contributor to the expansion in the loan portfolio. Overall, EFG-Hermes found the results "good", but questioned the effect of the CBE's recent move to raise interest rates on CIB's non-interest income. On another note, the bank has estimated that the impact of the new T-bills tax regime will be limited to around two per cent of pre-tax earnings. The bank has been reducing its exposure to T-bills over the past year, and income from these securities accounted for just 10 per cent of interest income in the quarter, compared to 20 per cent a year earlier. ORASCOM DEVELOPMENT HOLDING (ODH), the parent company of Orascom Hotels and Development (OHD), started to be traded on both the Swiss Stock Exchange (SXW) and CASE. Shareholders of 96 per cent of OHD swapped their shares for those of the Swiss- based ODH at a ratio of 10:1 in a tender that ended on 5 May. ODH had issued 1.25 million new shares to investors in Switzerland and elsewhere. UBS was granted 185,000 shares, bringing the total number of shares to 22.2 million, of which the free float is estimated at 38.7 per cent. TELECOM EGYPT (TE), Egypt's fixed line monopoly, posted negative results for the first quarter of 2008. Company subscribers grew by only 0.2 per cent through the three-month period. Subscribers increased by a meagre 26,048, which is 87 per cent lower than the same period in 2007 when promotional offers attracted more fixed line users. Altogether, TE's net profits came at LE557 million, which is 33 per cent lower than its level in the previous quarter. According to HC Investments, increasing competition from mobile network operators and the introduction of lower tariffs on mobile-to- mobile calls compared to fixed-to-mobile tariffs stripped TE of 15 per cent of its voice revenues through the quarter. Again, Vodafone Egypt proved to be a profitable investment to TE, with a contribution of 49.8 per cent to net income by adding LE277.3 million. Vodafone Egypt is 44.79 per cent owned by TE. In a commentary on the results, EFG-Hermes said that TE's bottom line was hurt by LE50 million in foreign exchange losses, as well as an LE7 million drop related to its fixed-line Algerian operation LACOM. ORASCOM TELECOM (OT) received offers to sell 363.3 million shares in the tender offer it held to buy back 106 million ordinary shares (including GDRs). OT said that it will accept 29.174 per cent of the offers. OT said last month that it had decided to buy back shares due to the availability of cash in excess, and a lack of any investment opportunity for the moment. Meanwhile, OT's CEO Naguib Sawiris said in an interview with The Financial Times that OT is interested in investing in Cuba if it is willing to change its economy in the same way that North Korea's has. This interest comes after the decision by Cuba's new President Raul Castro to lift a ban on the sale of mobile phones, computers and microwaves. Mobile penetration rate in Cuba at the end of 2007 was below two per cent. Compiled by Sherine Abdel-Razek
