Egyptian Shares Rally to Six-Week High, Led by Orascom Telecom

Egypt’s shares rose to a six-week high before the country’s first parliamentary session since the ouster of President Hosni Mubarak and as Orascom Telecom Holding SAE (ORTE) resumed trading after two months.

Orascom Telecom Holding surged 51 percent as investors speculated that the shares were undervalued after the company split into two. Juhayna Food Industries (JUFO), the country’s biggest packaged-milk producer, rallied the most in almost a month. Egypt’s benchmark EGX30 Index (EGX30) climbed 1.3 percent to 3,920.17 at the 2:30 p.m. close in Cairo, the highest level since Dec. 11. The benchmark measure earlier gained as much as 4.3 percent. The Bloomberg GCC 200 Index of companies in the Persian Gulf fell 0.2 percent.

“Orascom Telecom Holding’s resumption of trading and the first parliamentary session tomorrow” lifted investor sentiment, said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “It is the first step toward having an elected body in post-revolution Egypt.”

Islamists will dominate Egypt’s first parliament since Mubarak was overthrown. The assembly is scheduled to hold its inaugural session tomorrow as the country looks forward to the anniversary of the start of the protests that ended Mubarak’s three-decade rule. The assembly is supposed to select a committee that will write a new constitution, though its exact powers remain unclear.

Orascom Telecom Holding

Orascom Telecom Holding rallied to 2.62 Egyptian pounds as it traded for the first time since splitting the company to facilitate a $6.5 billion merger between parent Wind Telecomunicazioni SpA and Russia’s VimpelCom Ltd. Orascom Telecom Holding’s global depositary receipts, which haven’t been split, have climbed 46 percent to $3.26 since Nov. 23, the day before the Egyptian exchange suspended local trading. The shares made the largest contribution to the EGX30’s advance.

Following the split, Orascom Telecom Holding holds 58 percent of the original company’s assets, including units in Algeria, Pakistan and Bangladesh. Orascom Telecom Media & Technology Holding SAE owns the Egyptian and North Korean assets. Orascom Telecom Media shares, which were priced at 1.25 pounds, tumbled 28 percent to 0.9 pound.

“Most research houses saw the 58-to-42 split as an undervaluation for Orascom Telecom Holding and exaggerated valuation for Orascom Telecom Media,” said Dawood.

Juhayna advanced 2.9 percent, the most since Dec. 25, to 3.91 Egyptian pounds.

Abu Dhabi’s ADX General Index (ADSMI) gained 0.2 percent and Dubai’s DFM General Index (DFMGI) rose 0.5 percent. Qatar’s QE Index (DSM) fell 0.2 percent. Bahrain’s BB All Share Index (BHSEASI), Kuwait’s benchmark measure and Israel’s TA-25 Index (TA-25) were little changed.

Israeli government bonds fell, with the yield on the benchmark 5.5 percent Mimshal Shiklit notes due January 2022 rising three basis points, or 0.03 percentage point, to 4.5 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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