Tags: egypt | stocks | mideast | invest

Egypt Stocks Rally Sharply as Buyers Return

Sunday, 27 March 2011 02:39 PM

Middle East stocks rallied, with Egypt’s benchmark index rising the most in more than 15 months as investors said the shares were cheap after last week’s 12 percent plunge and as political stability was restored.

Orascom Construction Industries, Egypt’s biggest publicly traded builder, rose for a second day. Commercial International Bank Egypt SAE, the nation’s biggest lender, surged 7.4 percent. The EGX 30 Index climbed 5.3 percent, the most since December 2009, to 5,212.08 at the 1:30 p.m. close in Cairo. The measure dropped to the lowest level in almost two years last week after trading resumed following an almost two-month halt. The index, down 27 percent this year, is the world’s worst performer. The EGX 100 Index increased 7.2 percent Sunday.

Shares were pushed up by “a combination of cheap valuations and relative political and economic stability,” said Teymour El-Derini, head of Middle East Sales at Cairo-based Naeem Brokerage. “Investors may be encouraged to see signs of the country returning to normalcy.”

The EGX 30’s plunge this year, sparked by the unrest that led to the ouster of President Hosni Mubarak last month, has left the index valued at 1.4 times net assets, or book value, compared with 1.9 times at the end of 2010, data compiled by Bloomberg show.

Egyptians voted in favor of constitutional changes on March 19, paving the way for parliamentary and presidential elections by year-end. The country’s Cabinet also proposed a law last week to criminalize protests that hinder the work of public and private establishments to curb the almost daily demonstrations the country has seen following the ouster of Mubarak.

‘Cheap and Safe’

“Investors are looking for cheap and safe stocks,” said Ashraf Akhnoukh, senior equity sales trader at Cairo-based Commercial International Brokerage. Orascom Construction is a top stock pick because of its “international and regional” operations, he said. The shares were at a 9.9 percent discount to the London-listed stock, or global depositary shares, based on closing prices March 25.

Orascom Construction rose 8.2 percent to 221.52 pounds. Commercial International Bank soared the most since Feb. 2009 to 31.98 pounds. Orascom Telecom Holding SAE, the biggest mobile- phone operator in North Africa, surged 9.6 percent to 4.24 pounds.

In the Persian Gulf, Qatar’s measure rose 1 percent, the most in a week. Dubai’s DFM General Index gained 0.2 percent to 1,556.31, the highest in a month.

‘Positive Momentum’

“The positive momentum continues with the solid performance of Saudi markets,” said Ahmed Talhaoui, the Abu Dhabi-based head of investment at Royal Capital. “There is also a perception that the Egyptian market will stabilize sooner than expected.”

Saudi Arabia’s Tadawul All Share Index rose 0.2 percent after jumping 2.3 percent yesterday as the country created a ministry for housing. On March 18, King Abdullah ordered 250 billion riyals ($67 billion) be spent to construct 500,000 housing units, among measures to quell political protests. Saudi Arabia’s Shoura consultative council today started a fresh debate on a draft mortgage law.

The Bloomberg GCC 200 Index gained 0.2 percent and Bahrain’s BB All Share Index advanced 0.3 percent. Abu Dhabi’s ADX General Index rose 0.5 percent, while Oman’s MSM30 Index slipped 0.2 percent. Kuwait’s measure was little changed.

In Israel, the TA-25 Index rose 2 percent to 1,305.70, the biggest gain since Nov. 15. The benchmark Mimshal Shiklit government bond due January 2020 fell, pushing the yield on the 5 percent bond up 5 basis points to 5.34 percent, the highest since the bond was issued in November 2009.

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Middle East stocks rallied, with Egypt s benchmark index rising the most in more than 15 months as investors said the shares were cheap after last week s 12 percent plunge and as political stability was restored. Orascom Construction Industries, Egypt s biggest publicly...
Sunday, 27 March 2011 02:39 PM
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