US STOCKS SNAPSHOT-Wall St loses ground on investor caution
Tue Jan 26, 2010 3:35pm EST
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NEW YORK, Jan 26 (Reuters) - U.S. stocks lost some ground on Tuesday, trading little changed, as optimism about the economic recovery and earnings season was tempered by caution over the political landscape.
Stocks
* The Dow Jones industrial average .DJI added 28.12 points, or 0.28 percent, to 10,224.98. The Standard & Poor's 500 Index .SPX was off 0.43 point, or 0.04 percent, to 1,096.35. The Nasdaq Composite Index .IXIC edged up 0.50 point, or 0.02 percent, at 2,211.30. (Reporting by Leah Schnurr; Editing by Kenneth Barry)
(Reuters)
Tuesday, January 26, 2010
Solid Earnings Aren't Good Enough for Fickle Investors
CNBC.com
Corporate earnings may be hot, but Wall Street is not.
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Photo: Oliver Quillia for CNBC.com A trader at the New York Stock Exchange. |
As a solid majority of companies have beaten expectations, stocks have responded in muted fashion with major averages dropping below the breakeven point for the year and some analysts talking again of the long-awaited market correction.
Even Tuesday's market gains were seen more a function of an unexpected rise in consumer sentiment, as companies reporting earnings had mixed results in their stock prices.
So what's not to like about companies surprising to the upside by a nearly 4-to-1 ratio?
"Expectations have been rising for the market overall," says Gary Flam, portfolio manager for Bel Air Investment Advisors in Los Angeles. "It seems like over the last month the definition of risk changed from losing money to missing the next move higher. You saw a shift from fear to greed. All the news of the last week did was highlight there is still uncertainty out there."
But the news to which Flam refers is not the news from earnings but rather other events that overshadowed the earnings reports.
China said it was tightening lending restrictions; President Obama announced a move to clamp down on big banks; a Republican shocked Washington by winning the Massachusetts Senate seat held for 40 years by liberal lion Edward "Ted" Kennedy."
With all that noise in the market, it was tough for any earnings optimism to seep through.
"The 800-pound gorilla in the room...was Brown being elected to the Senate, which means it is highly likely we will have nothing going on," says Dirk Van Dijk, chief strategist at Zack's Equity Research. "Is the market now saying we might not like everything that Obama is proposing but we need to do something?"
US Budget Deficit Projected to Reach $1.35 Trillion
By: AP
The latest congressional budget estimates out Tuesday predict a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession.
Capital Money
CNBC.com
Capital Money
The Congressional Budget Office report predicts a sluggish economic recovery and continued high deficits that present twin political problems for President Barack Obama and his Democratic allies.
The report sees a slow rebound of the economy, with unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. It would grow only slightly more next year with an unemployment rate of 9.5 percent.
"Economic growth in the next few years will probably be muted in the aftermath of the financial and economic turmoil," the CBO report says.
The latest estimates also see a $1.35 trillion deficit for the current budget year, dropping to $980 billion next year — but only if a host of tax cuts enacted under President George W. Bush are allowed to expire.
It's a sobering reminder of the fundamental imbalance of the federal government's budget that comes just days before Obama's Feb. 1 budget submission. The White House says Obama will propose a three-year freeze on domestic agency budgets, though the savings would barely make a dent. It hasn't said whether Obama will proposes tax hikes or cuts to spiraling benefit programs such as Medicare, Medicaid and Social Security.
The deficit would slide to $480 billion by 2015, CBO says, but only if tax cuts on income, investments and large estates are allowed to expire at the end of this year. Most budget experts see deficits as far higher once tax cuts and other policies are factored in.
The 2010 deficit figure is in line with previous estimates and would be a slight decline from last year's $1.4 trillion shortfall. But plans afoot on Capitol Hill for a new jobs bill and a coming Obama request for war funds would add to the total.
The figures arrived just hours before the Senate is likely to reject a White House-backed plan to establish a bipartisan task force to recommend steps to curb the deficit.
The figures bring continued bad news on the deficit, keeping the pressure on Obama and congressional Democrats to demonstrate they're serious about taking on the flood of red ink.
The spending freeze, expected to be proposed by Obama during the State of the Union address on Wednesday, would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion. The freeze on so-called discretionary programs would have only a modest impact on a deficit expected to match last year's $1.4 trillion. The steps needed to really tackle the deficit include tax increases and curbs on benefit programs like Medicare, Medicaid and Social Security.
That's the idea driving the Obama-backed plan to create a special task force to come up with a plan to curb the spiraling budget deficit. But the Senate sponsors of the plan say it's attracted too much opposition from the right and left to prevail.
Republicans say the panel— it would try to develop a deficit reduction blueprint after the November elections for a vote before the new Congress convenes — would lead to big tax hikes. Democratic opponents say they don't want to vote on proposals to cut benefit programs like Social Security without being able to shape the plan.
Obama's three-year spending freeze will be part of the budget Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal unpublished details.
It's likely to confront opposition on Capitol Hill, where a handful of powerful lawmakers write 12 annual appropriations bills. They've gotten used to hefty increases but now are being asked to tighten their belts. House Appropriations Committee Chairman David Obey, D-Wis., declined to comment, his spokesman said.
The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze.
The savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to $250 billion.
The White House is under considerable pressure to cut deficits —the red ink hit a record $1.4 trillion this year —or at least keep them from growing. Encouraged by last week's Massachusetts Senate victory, Republicans are hitting hard on the issue, and polls show voters increasingly concerned.
Sen. John McCain, who lost to Obama in last year's presidential election, said he supports any attempt to cut discretionary domestic spending. "We need to do so," he said Tuesday.
But in an appearance on ABC's "Good Morning America," the Arizona Republican said Obama "has got to veto bills that are laden with pork-barrel spending, earmarks."
The latest congressional budget estimates out Tuesday predict a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession.
Capital Money
CNBC.com
Capital Money
The Congressional Budget Office report predicts a sluggish economic recovery and continued high deficits that present twin political problems for President Barack Obama and his Democratic allies.
The report sees a slow rebound of the economy, with unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. It would grow only slightly more next year with an unemployment rate of 9.5 percent.
"Economic growth in the next few years will probably be muted in the aftermath of the financial and economic turmoil," the CBO report says.
The latest estimates also see a $1.35 trillion deficit for the current budget year, dropping to $980 billion next year — but only if a host of tax cuts enacted under President George W. Bush are allowed to expire.
It's a sobering reminder of the fundamental imbalance of the federal government's budget that comes just days before Obama's Feb. 1 budget submission. The White House says Obama will propose a three-year freeze on domestic agency budgets, though the savings would barely make a dent. It hasn't said whether Obama will proposes tax hikes or cuts to spiraling benefit programs such as Medicare, Medicaid and Social Security.
The deficit would slide to $480 billion by 2015, CBO says, but only if tax cuts on income, investments and large estates are allowed to expire at the end of this year. Most budget experts see deficits as far higher once tax cuts and other policies are factored in.
The 2010 deficit figure is in line with previous estimates and would be a slight decline from last year's $1.4 trillion shortfall. But plans afoot on Capitol Hill for a new jobs bill and a coming Obama request for war funds would add to the total.
The figures arrived just hours before the Senate is likely to reject a White House-backed plan to establish a bipartisan task force to recommend steps to curb the deficit.
The figures bring continued bad news on the deficit, keeping the pressure on Obama and congressional Democrats to demonstrate they're serious about taking on the flood of red ink.
The spending freeze, expected to be proposed by Obama during the State of the Union address on Wednesday, would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion. The freeze on so-called discretionary programs would have only a modest impact on a deficit expected to match last year's $1.4 trillion. The steps needed to really tackle the deficit include tax increases and curbs on benefit programs like Medicare, Medicaid and Social Security.
That's the idea driving the Obama-backed plan to create a special task force to come up with a plan to curb the spiraling budget deficit. But the Senate sponsors of the plan say it's attracted too much opposition from the right and left to prevail.
Republicans say the panel— it would try to develop a deficit reduction blueprint after the November elections for a vote before the new Congress convenes — would lead to big tax hikes. Democratic opponents say they don't want to vote on proposals to cut benefit programs like Social Security without being able to shape the plan.
Obama's three-year spending freeze will be part of the budget Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal unpublished details.
It's likely to confront opposition on Capitol Hill, where a handful of powerful lawmakers write 12 annual appropriations bills. They've gotten used to hefty increases but now are being asked to tighten their belts. House Appropriations Committee Chairman David Obey, D-Wis., declined to comment, his spokesman said.
The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze.
The savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to $250 billion.
The White House is under considerable pressure to cut deficits —the red ink hit a record $1.4 trillion this year —or at least keep them from growing. Encouraged by last week's Massachusetts Senate victory, Republicans are hitting hard on the issue, and polls show voters increasingly concerned.
Sen. John McCain, who lost to Obama in last year's presidential election, said he supports any attempt to cut discretionary domestic spending. "We need to do so," he said Tuesday.
But in an appearance on ABC's "Good Morning America," the Arizona Republican said Obama "has got to veto bills that are laden with pork-barrel spending, earmarks."
Obama to Seek 3-year Freeze on US Domestic Spending
By: Reuters
U.S. President Barack Obama, under pressure from deficit hawks, will seek a three-year freeze on domestic spending in his 2011 budget that would save $250 billion by 2020, administration officials said on Monday.
 |
Photo by: Pete Souza President Barack Obama |
Obama will outline the spending hold-down in his State of the Union address on Wednesday and will spell it out in detail on Feb. 1, when he unveils his second budget.
Obama is under fire for a record deficit and has called for a bipartisan congressional commission to consider spending cuts and tax increases to improve the country's fiscal outlook.
His proposed budget savings will need congressional backing and would exclude Defense, Veteran Affairs, Homeland Security and spending on international affairs, the officials said.
"We are in the midst of fighting a war and have security needs. We're going to fund those security needs as necessary," one of the officials told reporters, speaking on condition of anonymity.
The officials declined to detail which agencies or programs would be hit, but said the overall freeze in so-called discretionary non-security spending would not halt investment in some areas, and would be balanced by cuts elsewhere.
Adjusted for inflation, the freeze would mean effective budget cuts in those areas of spending, the officials said.
Republicans dismissed the move as window-dressing by Obama's Democrats after an "unprecedented spending binge." "This is like announcing you're going on a diet after winning a pie-eating contest," said Michael Steel, spokesman for House of Representatives Republican leader John Boehner.
The 2010 budget allocated $447 billion to non-security discretionary spending, or about one eight of the overall budget. Agencies that could feel the pinch include the Commerce, Interior, Justice and Labor departments, as well as the Environmental Protection Agency.
The United States ran a record $1.4 trillion budget deficit in fiscal year 2009.
Part of the problem, on top of a severe recession that hit government revenue, are entitlement programs like social security and Medicare, the huge public healthcare program for older Americans.
Obama wants to reduce soaring Medicare costs through an overhaul of the $2.5 U.S. healthcare system, but his reforms are bogged down in Congress.
The officials said the proposed freeze would not affect entitlement programs but argued it could help set a tone of fiscal discipline.
"Imposing discipline here is one part of an overall picture and ... helping to create a new atmosphere of fiscal discipline ... can actually also feed into debates over other components of the budget," one of the officials said.
The freeze would cut the deficit by between $10 billion and $15 billion in fiscal 2011. A total of $250 billion would be wrung from the budget by 2020, they said.
But, the impact would not undermine the economy's recovery after the most prolonged contraction in 70 years.
"From a macro-economic perspective, I don't think there will be a huge affect in 2011," the official said.
AIG Investigator: Where the Billions Went
Neil M. Barofsky is not a household name like some special investigators of the past — Kenneth Starr during the Clinton administration or Archibald Cox in the Watergate years.
methodically pieces together the most complete historical record yet of the financial bailout. His reports are careful but not cautious, showing a willingness to stand up to some of the most powerful people and institutions in Washington or on Wall Street.
But increasingly, Mr. Barofsky is setting off fireworks on Capitol Hill as he quietly and
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Ap Neil Barofsky |
“Neil is not afraid to just follow things where they lead,” said Anthony S. Barkow, a friend and fellow former prosecutor in the United States attorney’s office for the Southern District of New York. “He is undeterred by having powerful people angry at him for doing what he does.”
So far, Mr. Barofsky has accused the former Treasury secretary, Henry M. Paulson Jr., of misleading the public about the health of the nation’s biggest banks during the crisis of 2008. He has been investigating the taxpayer-subsidized shotgun wedding of Merrill Lynch to Bank of America. He has named a group of bonus recipients at the American International Group who promised to return $45 million to their government-owned employer last year, then coughed up less than half of it. On Wednesday, Mr. Barofsky will be one of several top officials to answer questions before a Congressional panel on how the government handled the bailout of A.I.G. Mr. Barofsky will cite contradictions in the Treasury’s public statements about the bailout, according to an excerpt from his written testimony obtained by The New York Times.
The Treasury issued a statement this month that “taxpayers will be made whole” on certain investments in A.I.G., but its own analysis has estimated that the Treasury will lose $30 billion on the same investments, according to the prepared testimony.
Mr. Barofsky will also announce that he has opened an investigation into possible misconduct in the New York Fed’s efforts to limit A.I.G.’s disclosures about the bailout in filings with the Securities and Exchange Commission.
If there turns out to be a crime in any aspect of the bailout, Mr. Barofsky is not the one who will lay it out before a jury — he does not have the mandate.
“He’s more like the F.B.I. than the Department of Justice,” said Mr. Barkow, the former prosecutor. “He can’t control when his cases are going to be brought.”
Officially, he is not categorized as a special prosecutor; his job is a narrower one, auditing the disbursement of money under the Troubled Asset Relief Program. He goes by the ungainly title of special inspector general for the TARP, or Sigtarp.
But in an interview in his new quarters in Washington — a building on L Street, a vast improvement over the mildewed Treasury basement where he started out — Mr. Barofsky likened his job to “building a case for a trial.”
“You want to pursue every lead, every bit of evidence, everything to persuade the jury,” he said.
In this case the jury is the public, who suspect they have poured trillions of dollars down a black hole.
“Taxpayers really want to know,” Mr. Barofsky said. “I think too often in Washington, people underestimate how interested the public is.”
There are, in fact, several other panels charged with reviewing and monitoring the bailout. But Mr. Barofsky is the only one backed by federal agents who carry guns and badges and, if necessary, can break the locks off file cabinets.
Consumer Confidence Rises for Third Straight Month
By: Reuters
U.S. consumer confidence rose for the third straight month in January to the highest since September 2008, driven mostly by an improvement in present-day conditions, according to a private report released Tuesday.
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AP Consumer mood rose for the third straight month in January. |
The Conference Board, an industry group, said its index of consumer attitudes rose to 55.9 in January from an upwardly revised 53.6 in December.
The median of forecasts from analysts polled by Reuters was for a January reading of 53.5. Forecasts ranged from 50.0 to 57.0.
The December reading was revised up from an original 52.9. The expectations index rose to 76.5, the highest since October 2007, from December's upwardly revised 75.9.
The present situation index rose to 25.0, the highest since August, from 20.2Consumers' labor market assessment improved somewhat, but remained fairly dire. The "jobs hard to get" index eased to 47.4 from 48.1, while the "jobs plentiful" index rose to 4.3 in January from 3.1 in December.
Saudi to hold rates, keeps spending to boost economy
| Saudi to hold rates, keeps spending to boost economy | |
26 Jan 2010 05:00 PM
Riyadh - Saudi Arabia, the Arab world’s largest economy, is in no rush to raise interest rates and will keep plowing its oil revenue into kick-starting growth.
Central bank Governor Muhammad al-Jasser said in an interview he’s not planning to raise rates because inflation isn’t a concern and demand isn’t strong enough to require higher borrowing costs. Finance Minister Ibrahim al-Assaf told an investors’ conference in Riyadh that a “continuous stimulus” is needed even as the economy rebounds from last year’s stagnation.
Saudi Arabia’s economy will grow more than 4 percent in 2010 after expanding less than 0.2 percent last year, the finance minister said. Gross domestic product increased 4.3 percent in 2008.
The kingdom, the world’s largest oil exporter, last year announced that it would spend $400 billion on infrastructure over a five-year period to bolster the economy, the largest stimulus package in the Group of 20 nations. The country is allocating almost $70 billion to investments this year, a 16 percent increase on 2009. Rising oil prices, which have rebounded to about $75 a barrel from less than $35 in February, are also likely to boost growth this year.
“Stimulus packages shouldn’t be withdrawn prematurely, nor should they be extended more than required so as not to produce inflationary pressures,” al-Assaf said.
Government Spending
The Saudi government only managed to avoid recession last year through a large injection of public funds into the economy, said John Sfakianakis, Riyadh-based chief economist at Banque Saudi Fransi. It must extend its stimulus measures this year, he said.
“2010 will be a recovery year for the Saudi economy, based on high government spending,” he said. “This is what will keep the engine of the economy going.”
Al-Jasser said in an interview in his office in Riyadh that interest rates would increase only once “conditions show that inflation is either getting out of hand or that demand for credit is exceeding the supply of credit in the economy.”
The Saudi Arabian Monetary Agency last year cut the repurchase rate to 2 percent, the lowest since 2004, and the reverse repurchase rate to 0.25 percent as the global credit crunch led to a slump in oil prices, crimping growth.
Inflation held at about 4 percent in the five months through November after accelerating to as high as 11 percent in July last year.
Rates Unchanged
Interest rates in Saudi Arabia, as well as in the other four Gulf Arab countries that peg their currencies to the U.S. dollar, are likely to remain unchanged until U.S. monetary policy starts to tighten, said Giyas Gokkent, head of research at National Bank of Abu Dhabi. U.S. interest rates, currently near zero, are unlikely to increase before the end of this year, he said.
“The priority at the moment is the stimulus of the economy,” Gokkent said.
Growth in 2009 was “not bad,” al-Jasser said. “Put aside the oil sector, the rest of the economy continued to grow very comfortably. Nonetheless, 2010 should be even better because the fiscal stimulus seems to be still there” and in the course of the year the global economic recovery should “reduce uncertainty for investors in Saudi Arabia.”
Saudi Arabia’s benchmark Tadawul All Share Index jumped 27 percent in 2009 and gained another 2.6 percent this year. The Bloomberg GCC 200 Index of companies in the six Gulf Cooperation Council states increased 10 percent last year, while the MSCI Emerging Markets Index, a gauge of 22 developing countries, surged 75 percent.
Lending Slow
Businesses operating in Saudi Arabia may still struggle to get credit as foreign banks are reluctant to lend and local banks don’t have the resources to finance large projects, Samba, the kingdom’s second-largest bank, said in a report on Jan. 18.
“Until banks have the confidence to lend we won’t see credit conditions improving and this will hold back the recovery,” Paul Gamble, head of research at Jadwa Investment, said in an interview at an investors’ conference in Riyadh today.
Bank lending slowed following the financial market turmoil and the default of two Saudi family conglomerates, Ahmad Hamad Algosaibi & Brothers Co. and Saad Group. Eighty lenders, including BNP Paribas SA and Citigroup Inc., are owed at least $15.7 billion, sparking a flurry of litigation.
Lending Growth
In spite of the crisis, there was an “absolute increase” in lending last year, said al-Jasser, a former executive director for Saudi Arabia at the Washington-based International Monetary Fund. Private-sector borrowing rose about 1 percent last year after soaring in the previous three years, he said.
“In 2010, as the economy picks up and confidence in the global recovery improves, the private sector will go back to investing more than it did in 2009,” al-Jasser said. “Lenders will feel more confident about their clients because they know after the crisis who proved to be more robust.”
The central bank governor said the kingdom will issue its first mortgage law in the next few months, boosting the real- estate industry and allowing banks to diversify their balance sheets.
Source: Bloomberg
Egypt’s stock exchange weekly report (17–21 Jan 2010)
Arab Finance: Egypt’s stock exchange benchmark EGX 30 index increased by 2.74 % this week, representing a jump of 183.39 points, ending Thursday transactions at 6864.19 points compared to 6680.80 points at the end of last week.
Regarding current week trading, the index hit its highest point on Wednesday closing at 6888.45 points, where its lowest point was on Sunday, at 6697.73 points.
On Sunday, Egypt’s stock exchange benchmark “EGX 30 index” extended gains for the ninth session in ten since 2010 start and advanced by 0.25 % to close at 6,697.37 points in fluctuated session. Market trade volume reached 126,838,892 transactions amounted to L.E 1,166,470,729.
Egypt’s stock exchange benchmark “EGX 30 index” continued in green and gained 0.42 % on Monday fluctuated session to close at 6,725.28 points. Market trade volume reached 141,140,407 transactions amounted to L.E 1,539,866,787.
On Tuesday, EGX 30 index went on its upside trend and jumped by 1.61 % to close at 6,833.26 points (top point for two months). Market trade volume reached199,141,630 transactions amounted to L.E 2,793,546,232.
Egypt’s benchmark “EGX 30 index” climbed 0.81 % in Wednesday session to close at 6,888.45 points. Market trade volume reached 150,982,371 transactions amounted to L.E 1,795,196,051.
On Thursday, EGX 30 index ended its upside trend and dipped slightly by 0.35 % session to close at 6,864.19 points. Market trade volume reached 160,521,456 transactions amounted to L.E 1,440,198,238.
Companies’ weekly performance highlights:
Orascom Telecom Holding (OT) - (ORTE) stock closed on Sunday at LE 28.55 while closed on Thursday at LE 29.94, up by 5 % and about L.E 1.39.
The highest price for the stock during the week came on Wednesday when it closed at LE 29.98, while the lowest price for the stock during the week came on Sunday at L.E 28.55.
On Sunday, OT Globalive Communications is in talks with banks to raise “several hundred” million dollars in debt to finance expansion, CEO Anthony Lacavera said.
Globalive plans to select banks to manage the sale in the next few weeks, Lacavera said in an interview today in Toronto. He declined to name the lenders.
The company is considering bonds and syndicated loans, which may be used to repay debt as well as fund expansion of the network in Western Canada and Ontario, he said.
“We need to accelerate our business plan,” Lacavera said. “We’ve got to get that network built aggressively and stick with our model across the country as fast as possible.”
The company is targeting 1.5 million subscribers over three years, compared with more than 8 million for Toronto-based Rogers, Canada’s largest mobile-phone company.
On Wednesday, Mohamed Fayed, Head Corporate Banking at Banque Misr reported that participating global and local banks in OT L.E 2.5 billion loan are nearing approval on company L.E 4.3 billion capital increase.
Moreover, Fayed added that the participating banks (including Banque Misr) saw such capital increase as a supporting step to OT cash flows and financial restructure particularly after tax retention imposed on its Algerian unit.
Orascom has to announce if it receives approval by January 24 at maximum. Subscription call will be null if the banks reject the capital increase.
On Thursday, Canada’s mobile-phone penetration rate, which trails poorer countries like Algeria, may climb to 100 percent within a decade as more customers opt for prepaid contracts, according to OT.
There were 66 wireless subscriptions for every 100 Canadians in 2008. There is no reason why Canada can’t match rates in Greece or Italy, which are above 120 percent, said Khaled Bichara, chief executive officer of the Cairo-based company that is backing Canada’s newest wireless carrier.
“Passing 100 percent is a matter of when not if,” Bichara, 38, said in an interview yesterday. If the penetration rate in Canada doubled to European levels, and “if we even take a small percentage of that doubling, that’s still a big business for us,” he said.
Orascom is investing as much as $700 million in Globalive Communications Corp., which began selling mobile phones to Canadians last month.
Egyptian Company for Mobile Services (Mobinil) - (EMOB) stock closed on Sunday at LE 226.9, while closed on Thursday at LE 230.18, gaining 1 % by L.E 3.28.
The highest price for the stock during the week came on Wednesday when it closed at LE 231.18, while the lowest price for the stock during the week came on Sunday, at LE 226.9.
On Sunday, Mobinil was upgraded to “buy” from “neutral” at UBS AG, which cited an “attractive” valuation and “superior” long-term growth outlook.
The brokerage increased its price estimate to 280 Egyptian pounds from 250 pounds on earnings estimates and lower risk premium, according to a note dated today.
Separately, Mobinil announced that it made a L.E 750 million installment to the telecom regulator as part of a payment for its 3G license.
On Monday, Khalid Ellaicy, company CFO stated that his company paid 3G installment through its available liquidity.
“After payment we still have L.E 1 billion in cash as credit facilities,” He noted, adding that Mobinil did not get more facilities to cover the payment.
Moreover, Mobinil is awaiting new codes and NTRA securing to frequencies domain. He added that Mobinil paid L.E 1.5 billion out of the total L.E 2.250 billion.
On Wednesday, Tarek Kamel, Minister of Communication & Information Technology invited OT and FT to hold an urgent meeting in the ministry headquarter and with attendance of Amr Badawi CEO of NTRA.
The purpose of the meeting is to exchange opinions over Mobinil deal dispute and to reach a fruitful solution to end the current crisis between the two parties.
Kamel expressed his fears that continuing legal dispute may hit Mobinil operations and added that I will try to reach a neutral agreement between the two companies.
The dispute is commercial and we are asking the two parties to meet once more to discuss a solution that would satisfy them," Ahmed Raouf, spokesman for minister Tarek Kamel, said on Wednesday.
On Thursday, France Telecom said it and OT held high-level discussions in the past week to find a resolution to their prolonged battle for control over Mobinil.
FT deputy chief executive Jean-Yves Larrouturou, who heads the business in Africa, Middle East and Asia, has spoken with Orascom executive chairman Naguib Sawiris since a court ruling on January 13 halted a tender offer that would have seen the French group seal control of Mobinil.
The two sides have been in touch at various points throughout the conflict, a France Telecom spokesman said, adding: "The discussions are continuing. We are also in touch with Egyptian authorities".
Egyptian Financial Group-Hermes Holding Company - (HRHO) stock closed on Sunday at LE 31.47 while closed on Thursday at LE 31.46, slightly down by L.E 0.1.
The highest price for the stock during the week was on Sunday when it closed at LE 31.47, while the lowest price for the stock this week came on Tuesday, at LE 31.06.
On Sunday , Lebanese ex-Prime Minister, Naguib Mikati, said he is about to acquire 14 % in EFG-Hermes 28 %stake in Audi Bank; while other Arab and Lebanese investors will acquire the remaining stake.
Close source to Mikati’s family stated that the deal has entered the final stage, adding that acquisition details will be revealed within weeks.
Yasser Almallwany, CEO of Hermes, attributed selling company’s stake in Audi Bank to business reasons, as the company asserted previously it is discussing a number of strategic options to enhance its investment position, one of which is to sell Audi’s stake.
On Monday, EFG-Hermes announced that it has sold its stake in Lebanon's Bank Audi for $ 913.4 million, as the 28 % investment was tying up too much of its funds and afforded no prospect of control.
EFG-Hermes sold 7.5 million common shares and 2.5 million GDRs in the bank, it said in a regulatory statement on.
"With one investment, without control, representing over 50 percent of our adjusted book value, it became clear that a divestiture should be considered," EFG-Hermes said in the statement.
"After lengthy discussions with Bank Audi regarding a combination of the two businesses, it became evident after the events of 2008 that an amalgamation in the near future will be difficult," the EFG-Hermes statement added.
EFG-Hermes made an unconsolidated capital gain of $ 260 million on the sale, it said.
A statement released by Audi said "a group of its existing shareholders, as well as a number of other high net worth individuals and entities investing directly or through investment vehicles" bought the stake at a price of $91 per share and GDR.
"Following the transaction, none of the purchasers individually own 5 percent or more of the common shares of the bank," the Audi statement said.
Lebanon's M1 group, owned by the Mikati family, bought part of the stake, one financial source said, without giving further details.
EFG-Hermes Holding Company was again the number one broker on the Egyptian Exchange (EGX), the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) for the full year 2009, and according to data independently available from the region's stock exchanges.
The firm also posted strong finishes in Kuwait, Oman and Saudi Arabia, among other markets.
"The year 2009 was a rollercoaster for global financial markets, but EFG Hermes Brokerage succeeded as a balanced business focused on serving and advising clients across a diverse institutional, high-net-worth and retail base.
Our unparalleled market access and commitment to technological innovation and order execution in all major Arab markets back this commitment to client needs and support its market leadership," said Sherif Cararah, Head of Securities Brokerage at EFG Hermes.
El Ezz Steel Rebars - (ESRS) stock closed on Sunday at L.E 18.54 while closed on Thursday at L.E 18.57 (about L.E 0.03 drop).
The highest price for the stock during the week was on Wednesday when it closed at LE 18.85, while the lowest price for the stock this week came on Sunday, at LE 18.54.
On Tuesday, Kamel Galal, company Investor Relations Manager stated that Suez flat steel plant will be inaugurated in the end of next February.
He added that the company will operate billet steel production line (values $ 75 million) with 1.2 million tons production capacity.
According to Galal, production in the new sponge steel plant in Suez ( at $ 400 million) is scheduled to start in 2H/2011 with production capacity of 1.9 million tons.
Moreover, he highlighted the significant increase in flat steel prices at the end of Q3 and Q4 of 2009 will boost company annual profits.
It is worth mentioning that, Ezz steel group submitted al documents to Ministry of Trade and Industry as a part of local steel companies plant to take anti dumping measures against Turkish imports.
He added that, the company is targeting to increase its profits during the first quarter of 2010 by about 10-15 %.
Orascom Construction Industries (OCIC) stock closed on Sunday at LE 264.31 while closed on Thursday at LE 269.41 with 2 decline (L.E 5.1).
The highest price for the stock during the week was on Wednesday when it closed at LE 272.37, while the lowest price for the stock this week came on Sunday, at LE 264.31.
On Thursday, CI Capital increased target price of Orascom Construction Industries (OCIC) by 19 % to L.E 310 per share from L.E 260.8 but maintained LTFV at L.E 266.9/share.
The brokerage argued that the Chinese government has amended its fertilizer export tariffs and such change will come into effect in late January. Consequently, export tax on urea from will be increased from 7% to 100%.
CI Capital expected urea price to hit $ 367/ton in 2010 up from current $ 315. Hence, OCI fertilizer business should be positively affected sooner than expected. These higher tariffs are a catalyst for stronger fertilizer prices in the near term and possibly a materially stronger price than expected going forward .
Moreover, it added that the new TP implied that fertilizer LoB would trade at 15.7x in 2010E EV/EBITDA compared 15.2x for its international fertilizer peers. It also implied some 14 % upside potential and ,as a result, CI Capital reiterated its Hold recommendation.
Sectors performance:
The most active sectors all through the week were Personal and Household Products, Financial Services excluding Banks, Construction and materials, Real Estate and Telecommunications.
Financial Services excluding Banks came first in terms of performance, as it achieved total traded value of LE 1,121,976,649.
Real Estate sector ranked second in terms of performance, as it achieved total traded value of LE 1,054,204,274.
Thirdly, Food and Beverage sector, it achieved total traded value of LE 733.282.127.
Fourthly, Telecommunication sector, it achieved total traded value of LE 659,139,147.
Finally, Construction and Material, it achieved total traded value of LE 631,506,246.
Regarding the investors’ activity:
-Local investors led the market activity all through the week, followed by Foreign and Arab investors respectively.
-Foreign investors were the most active buyers all through the week as they dominated the market by the value of LE 468.280.292.
-Local investors were best sellers through this week by the value of LE 256,113,236.
-Arab investors were also net sellers by the value of LE 212,167,057.
Retail and Institutions’ activity:
Retail activity led the market all through the week as it ranged between 46.47% to 71.43%, while Institutions activity ranged during this week between 28.56% to 53.52.75%.
EGX30 continues downside trend by 1.32 % on Tuesday
Arab Finance: Egypt’s stock exchange benchmark “EGX 30 index” extended losses for the third session with sharp decline by 1.32 % on Tuesday to close at 6,569.47 points, compared to 6,657.42 points in Sunday session.
Market trade volume reached 112,511,176 transactions amounted to L.E 1,038,486,126.
It is worth noting that, all of Egypt's markets were closed on Monday Jan. 25 for a National Police holiday.
Orascom Construction Industries slightly decreased by 0.10% at L.E 260.10. OCI announced that it will form a 50/50 joint venture with Morgan Stanley to invest in infrastructure in the Middle East and Africa.
Nassef Sawiris, company CEO said, “Morgan Stanley is a proven leader in global infrastructure investing. This proposed joint venture is positioned to capitalize on Morgan Stanley Infrastructure’s investing expertise and its global reach as well as our local and regional awareness of infrastructure needs.
“Our region still has a long way to go to develop world class infrastructure and there's a huge infrastructure spending deficit across all areas -- from roads, houses, sewage to softer infrastructure in healthcare and education," Sawiris added.
"The opportunities are immense and a partnership with Morgan Stanley will help us meet the vast opportunities we are confronted with on a daily basis from governments."
Egyptian Chemical Industries (Kima) gained 3.36% in Tuesday session to close at L.E 178.61. Chemical Industries Holding Company stated that it will name the financial adviser to develop and restructure Kima next Thursday.
The financial adviser will assign the financial alternative to cover the investment cost, which amounts to $ 600 million in order to finance company’s plan to establish its new ammonia plant in Aswan.
It is worth noting that, Kima received bids from 5 companies to gain this mission, while the Holding Company chose 3 of which it called serious bids.
Regarding Today Company’s performance, market's top 5 gainers in terms of turnover respectively were: Orascom Telecom sunk by 5.33 % to close at LE 26.98, Egyptian Media Production City advanced by 6.32 % to close at LE 9.25, Commercial International Bank ended lower by 1.14 % to close at LE 58.01, Orascom Construction also retreated by 0.10 % to close at LE 260.10 and AJWA dipped by 6.35 % to close at LE 12.97.
Regarding market players’ performance:
Local Investors’ transactions were extremely prevailing as they made 80.93 % of total market deals.
Foreign investors ranked in second place with 10.79 %, while Arab made the remaining 8.28 %.
Local Investors’ purchasing power was clearly proven during Tuesday session by its value amounted to L.E 90,382,437.
On the other hand, Arab and Foreign Investors chose to heavily sell their stocks to yield L.E 87,966,335 and LE 2,416,101 respectively.
Individuals’ activity dominated the market by an average of 64.63 %, compared to 35.36 %, which represented the Institutions’ activity.
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