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MEEF - CyberShow Middle East Projects News
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UAE company wins bid for resort
development project in north Egypt
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 Emaar Properties,
the Dubai-based real estate company,
Saturday defeated the other two bidders
to win the right to develop a big
seaside tourism project in north Egypt,
Egypt's official MENA news agency
reported.
Emaar offered a bidding price at one
billion Egyptian pounds ( about 174
million U.S. dollars) and outbid the
other two Egyptian companies, namely
Orascom Hotels and Development and
Talaat Mustafa Firm.
With the win, Emaar will be authorized
to develop the first phase of a giant
tourism project, which was located in
the Mediterranean city of Sidi Abdel
Rahman, about 350 northwest of Cairo.
The first-phase project, with an area of
6.2 million square meters, would include
9,000 residential units, two five-star
hotels, a marina, luxury golf grounds,
shopping centers and sports facilities.
Emaar Egypt said that the company
planned to spend 10 billion Egyptian
pounds (about 1.7 billion dollars) to
develop the site and put it into
operation within five years.
The project is aimed at developing and
reconstructing Sidi Abdel-Rahman area
and turning the northern coast of Egypt
into an international tourist resort,
said MENA.
The tourism industry was considered the
bread and butter of the Egyptian
economy. Egypt ranked the 28th biggest
tourism destination.
Egypt received 8.6 million tourists in
2005, 6 percent up from 8.1 million in
2004, and tourists spent some 6.5
billion dollars in the year.
Emaar is the
largest overseas investor in the
United Arab Emirates
(UAE), with a portfolio of projects
topping some 84 billion U.S. dollars.
The company has launched major
developments in a number of countries
including Saudi Arabia, Egypt, Turkey
and Tunisia.
Source:
People's Daily
(Nearly) the Biggest Loser
The CASE is now the second- or third-worst
performing market in the world, with
investors choosing to sell and stay on the
sidelines despite outstanding corporate
performance and increasingly strong economic
fundamentals.
By Fatima El-Saadani - Business Today
From the
best performing exchange in the world for
the last three years running, the Cairo and
Alexandria Stock Exchange is now the second-
or third-worst performing on the planet, in
a neck-and-neck race for last place with
Saudi Arabia and Dubai.
Last month’s performance made it official,
as the benchmark CASE30 Index slipped more
than 16% tumbling to 4,972.09 points on June
20 — a level the market had last seen almost
a year ago after terror attacks shook Sharm
El-Sheikh on July 23, 2005.
The market hit rock bottom on June 14,
stricken with global fears of another
interest rate hike by the US Federal Reserve
and a slowdown in the US economy, mirroring
the performance of pretty much every other
market in the world.
After a 10% slide in May, blamed by players
on inexperienced small-time retail
investors, market officials teamed up with
the media, broadcasting an advertising
campaign targeting small investors and
encouraging them to educate themselves about
the stock market in order to make
well-informed decisions.
Meanwhile, government officials, local
papers and international investment banks
and rating agencies — including JP Morgan,
Standard Chartered and Moody’s — flooded the
papers with statements attesting to Egypt’s
economic strength.
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Audited figures show foreign direct
investment (FDI) increased from $2 billion
in FY2003-04 to $3.9 billion in FY2004-05
and should top out at over $5 billion by the
end the now-ending fiscal year. Tourist
numbers increased 12.5%, from 819,000 in
April 2005 to 921,000 in April 2006, while
tourist nights climbed from 7.43 million in
April 2005 to 7.65 million in April 2006.
Foreign reserves hit $22.79 billion at the
end of April 2006, up from $22.53 billion at
the end of March. Privatization revenues in
the nine-month period ending March 2006
reached LE 19.95 billion, while exports
increased 55.6% to LE 19.6 billion in 1Q06,
compared to LE 12.6 billion in the same
quarter last year, and imports increased
8.4%, to LE 28.5 billion, in the same
period.
On the downside, inflation increased to an
annualized 5.3% in May 2006, compared to
4.1% the month before and 4.9% in May 2005.
So it’s back to the drawing board: Why is
the market crashing if the economy’s doing
so well? Have investors simply lost
confidence in the CASE? Sure, the local
market is affected by rising interest rates
and the falling Arab markets, but despite
all that, the CASE has much stronger
fundamentals than other regional markets,
from valuations to the market’s depth and
regulatory systems.
Generally speaking, the summer months are a
period of slow growth on the market.
Nevertheless, the string of terrorist
attacks the country has witnessed over the
last couple of years (Taba in October 2004,
Sharm El-Sheikh in July 2005, Dahab in April
2006) and their obvious correlation to
Egypt’s national holidays have made it hard
not to wonder whether another is in store
for this month’s Revolution Day holiday.
That, coupled with the continued fall of
Gulf markets and the noisy political-reform
debate, might explain investors’ apparent
‘wait and see’ strategy.
But that’s a sentimental explanation of
what’s going on in the market. Speaking in
numbers, market experts expect an economic
slowdown in the next few months in light of
the losses incurred on the stock market,
which have cut market capitalization by as
much as LE 170-200 billion — a sum equal to
50% of almost one million families’ savings.
It’s a loss bound to have an effect on
purchasing power and demand for goods.
Amidst all the chaos in the market, the
Capital Market Authority (CMA) continues to
maintain its promise to introduce new tools
to expand the market, while the small
investor is calling for the return of
tighter regulatory controls. Same-day
clearance and stocks trading without
price-change limits are great when the
market’s on the way up, but they can just as
easily play against you when it’s deep in
the grip of a correction.
The CMA announced last month that it will
soon introduce short-selling, paving the way
for margin trading and complementing
same-day trading (T+0), which was launched
last October. The CMA has also issued the
regulations necessary for the trading of
omnibus accounts. Meanwhile, small investors
are calling on the CASE to prohibit same-day
trading, or at least suspend its application
until the market stabilizes.
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The market’s fall was exacerbated by the
fact that some Gulf institutions moved their
capital out of the market to reinvest
elsewhere, disregarding a strong wave of
earnings growth in recent months and the
increasingly attractive valuations of many
of the CASE’s blue chips.
But every cloud has a silver lining:
Investors pulling out have made the Egyptian
market increasingly cheap, with valuations
so low a comeback seems inevitable. We hope.
Orascom Telecom (OT, bt100 number 1) sank
with the market last month, sliding as much
as 15% to LE 235 despite news of the
company’s growth. Its Algeria-based
subsidiary, Orascom Telecom Algeria (OTA),
secured a $307-million additional long-term
financing facility arranged by Calyon Bank
and Citibank at the beginning of our
reporting period to finance new expansion
and to repay its existing debt. In Serbia,
OT was short-listed to buy a 70% stake in
one of Belgrade’s top privatization
candidates, MOBI63. In addition to OT, nine
other bidders — including UAE’s Etisalaat,
France Telecom, and Deutsche Telecom — are
in the race for the $977 million mobile
company. Weak GDR performance also affected
OT’s local stock performance, which in turn
saw local telcos MobiNil and Vodafone Egypt
take hits.
Telecom Egypt (TE, bt100 number 3) made the
short list of qualified bidders for the
nation’s third mobile operator’s license,
joining eight others on June 10. TE’s shares
were immune to the good news, though, as
they plunged for the rest of the month. That
might be explained by the disqualification
of Saudi Telecom Company (STC) from the
technical bids for the third mobile license:
STC had announced that if it were awarded
the third license, it would give an Egyptian
company up to 20% of its share. With STC now
out of the way and TE still standing a
chance to lose its lucrative
revenue-generating 25% stake in Vodafone
Egypt (bt100 number 5) if it wins the bid,
investors are dumping the stock to see how
events unfold.
TE has been a disappointing stock. It
brought in thousands of new profit-seeking
retail investors who lost their savings as
its shares dropped below their initial
offering level. Its recent announcement that
it had netted international call revenues
worth LE 616 million would usually signal
growth for the company, but did little to
alleviate selling pressure. Its agreement
with the Libyan Ministry of
Telecommunication to establish a land and
maritime cable service between the two
countries similarly failed to buoy TE’s
stock.
Of all the telecom stocks, Vodafone Egypt
fared best, incurring a loss of only 8% this
month. OT shares, by comparison, shed more
than 15%, MobiNil (bt100 number 6) dropped
20%, TE lost 13% and Raya Holding (bt100
number 17), which also made first cut to bid
on the third mobile license, dipped 13%.
Stumbling with the rest of the market,
Orascom Construction Industries (OCI, bt100
number 2) closed the period at LE 180, a
loss of nearly 13%. The company had
announced receiving a seven-year,
$287-million long-term facility from local
banks, including the Arab African
International Bank, Bank of Alexandria,
Banque Misr, National Bank of Egypt,
Citibank and Commercial International Bank
(CIB, bt100 number 13). OCI also announced
plans to invest $200 million to build a new
cement factory in Algeria with an annual
capacity of 1.5 million tons.
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OCI also announced last month that it is on
schedule to deliver a new cigarette factory
to Eastern Company (bt100 number 8) in
October worth LE 245 million.
Orascom Hotels and Development (OHD, bt100
number 32) dipped to a low of LE 25.26 this
month even though it announced the start of
its joint venture in Oman, Moria for Tourism
Development. Moria is 70%-owned by OHD
(70%), while the Oman Company for Tourism
Development holds the balance. The new
venture has investments worth $574 million
and will build OHD’s four projects in the
Sultanate. With stock performance driven by
investor sentiments, news of competition
from UAE-based Emaar did not faze OHD’s
performance. Emaar announced last month that
it plans to acquire a 40% stake of the
Egyptian market, with investments of $8
billion in five real estate projects in
Egypt already underway, including a contract
to develop land adjacent to the Bibliotheca
Alexandrina as well as the facing seafront.
In banking and finance, regional investment
bank EFG-Hermes (bt100 number 26) and
National Société Generale Bank (NSGB, bt100
number 23) were two of the worst performing
stocks of the month. By the end of the
period, EFG-Hermes had lost more than 40% on
its share price, while NSGB closed down more
than 30%.
Al-Watany Bank of Egypt (WATA, bt100 number
36) was 14% lower at the end of the period,
unaffected by the establishment of its first
LE 100 million investment fund, with one
million certificates worth LE 100 each at
par. Meanwhile, Egyptian American Bank (EAB,
bt100 number 37), recently acquired by
France’s Calyon Bank, fared relatively well,
shedding only 11% by the end of the period.
The two banks were to be fully merged by the
end of June with an estimated financial
position worth LE 15 billion. Calyon Bank is
planning a three-part capital increase to LE
500 million from LE 93.86 million. CIB plans
to follow suit, raising its issued and
paid-in capital to LE 1,950 million from LE
1,300 million, through a stock dividend
financed from bank reserves.
In the cement sector, production, sales and
exports increased throughout 1Q06, a fact
that did absolutely nothing to prop up key
stocks.
Suez Cement (bt100 number 11) and Misr Beni
Suef Cement (bt100 number 48) fell more than
17% each. Suez Cement had signed a
preliminary agreement to buy a 52% stake in
two ready-mix companies for a total LE 78
million. The two, RMB and RMBE, together
control 30% of ready mix-production in
Egypt.
ASEC Cement (bt100 number 20) announced the
establishment of a new cement company in
Syria. With total investments worth $180
million, ASEC Syria Cement Company capital
stands at $90 million; the factory will have
a production capacity of 1.5 million tons
per year.
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In the textile industry, Arab Polvara
Spinning and Weaving (APSW, bt100 number 58)
slipped a hefty 24% this month, even as its
EGM approved a 100% increase in authorized
and paid in capital to finance the
construction of a new spinning facility. The
new line will produce fine threads for
export with a capacity of 30,000 spindles
per year. The company’s stock traded below
LE 6 for almost a week after the
announcement, down from LE 8 at the end of
May, before gaining slightly.
As the market continues to be led by trends
and unaffected by fundamentals, it seems
unlikely it will swing up until
bargain-seekers realize the potential and
trigger a new wave of buying.
