Egypt nudges off 29-month low

Cairo: Egypt's benchmark index nudged up following a tumble to a 29-month low last week after Ezz Steel dipped in the wake of its former chairman being sentenced to jail for graft and the firm having two of its licences withdrawn, traders say.

Shares in Ezz Steel were suspended last week shortly after the stock lost almost 9 per cent following the court ruling against Ahmad Ezz, a former senior official in ousted Hosni Mubarak's party.

The shares are still suspended after the stock exchange requested information from the firm in light of the ruling.

Ezz shares last traded at 7.81 Egyptian pounds (Dh4.80) on Thursday before being suspended. CI Capital Research reduced its valuation for the firm to 8.80 pounds from 12 pounds, but due to a drop in share prices, its recommendation for the stock shifted to ‘hold' from ‘sell', CI director Hany Samy said.

"Because the drop in the stock market was much higher, that is why we consider it a hold," Samy said. "These licences are related to future expansion, they are not going to affect the current operations of the company."

The new licences will be offered again by the authorities for free and Ezz will be able to bid for them, traders say.

Referring to the removal of the licences, Beltone says in a research note: "The effect on the company will not be felt now, but it is significant, as both licences underpin Ezz Steel's vertical integrated expansion plans, the premise of our investment case."

Ashraf Akhnoukh of CIBC brokerage says he sees the market recovering a bit, partly helped by a recovery in global markets on Friday, when Egypt was closed.