Egypt Shares Gain on View Central Bank May Cut Interest Rates, Led by CIBE

Egypt shares rose to the highest level in almost three weeks on speculation the central bank may cut interest rates after inflation eased in November. Qatar’s benchmark advanced.

Commercial International Bank Egypt SAE, the country’s biggest publicly traded bank, led the gain and Six of October Investment & Development SAE surged to a more than two-year high after the Cairo-based real-estate developer said it approved a five-for-one stock split to increase liquidity. The EGX 30 Index advanced for a third day, increasing 0.6 percent to 6,916 at the 2:30 p.m. close in Cairo. In the Persian Gulf, Qatar’s benchmark rose 0.5 percent, while the Bloomberg GCC 200 Index slipped 0.1 percent.

“We’re seeing the market react to the unexpected drop in the inflation rate” in Egypt, said Tamer Nigm, head of sales and trading at Cairo-based Watheeqa Securities Brokerage. “There’s speculation the central bank may cut interest rates as a result.”

The inflation rate in urban parts of Egypt, the benchmark that the central bank monitors, fell to 10.2 percent from 11 percent in the previous month, the Cairo-based Central Agency for Public Mobilization and Statistics said Dec. 8 on its website. Monthly prices fell 0.8 percent, it said.

The central bank maintained its overnight deposit rate at a four-year-low of 8.25 percent on Nov. 4, saying inflation in non-food items remained subdued. It also noted that uncertainty about the recovery of the global economy may weigh on domestic investment and external demand. The central bank will meet on Dec. 16 to review interest rates.

World Cup Spending

Commercial International increased 2 percent to 44.41 Egyptian pounds, the highest since Oct. 26. Six of October soared 5.4 percent to 111.19 pounds, the highest since September 2008. The stock-split aims to make the shares more accessible for small investors, the company said.

Qatar’s QE Index rose to 8,794.83, the highest close in more than two years, on optimism government spending on infrastructure will boost economic growth after the country won the rights to host the soccer World Cup in 2022.

“Positive sentiment after Qatar won the world cup bid is persisting as volumes improve and international investors return to the market,” said Ahmed A. Hadi, general manager of equity brokerage at Dlala’ Brokerage & Investment Holding Co. in Doha. “The massive infrastructure spending expected in 2011 will boost the country’s economy.”

Tabreed Falls

Qatar, projected by the International Monetary Fund to have the world’s fastest-growing economy this year, plans to more than double the number of hotel rooms, build nine stadiums and refurbish three others as well as construct a rail and metro network for the tournament. Moody’s Investors Service estimates that the country will spend about $57 billion over the next decade for infrastructure developments related to the World Cup.

Qatar’s index has soared 7.5 percent since the country was awarded the World Cup on Dec. 2.

Abu Dhabi’s ADX General Index increased 0.2 percent. Dubai’s benchmark stock index dropped 1 percent, the most in two weeks, led by National Central Cooling Co. The United Arab Emirates-based utility company that is restructuring debt lost 5.1 percent, the most since June 1, to 1.96 dirhams.

The company known as Tabreed received regulatory approval to cancel 970 million shares, which would allow its share price to exceed the minimum of 1 dirham (27 cents) required to qualify for selling new shares, it said Dec. 9. The new shares began trading today, with each equalling five old shares in value.

Bahrain’s All Share Index retreated 0.1 percent, Kuwait’s gauge slipped 0.3 percent and Oman’s MSM30 Index fell less than 0.1 percent. Saudi Arabia’s Tadawul All Share Index climbed less than 0.1 percent.

In Israel, the TA-25 Index decreased 0.4 percent to 1,293.14 at the close in Tel Aviv. Israeli bonds fell, with the yield on the benchmark 5 percent Mimshal Shiklit due January 2020 rising 4 basis points to 4.71 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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