[2007-12-11]  Egypt shares lower as Orascom Construction weighs
Egypt's benchmark stock index posted its sharpest single-day drop in almost four months on Monday as investors dumped shares of Orascom Construction Industries (OCI) after it agreed to sell its cement arm.

OCI, Egypt's largest construction firm by market value, said it agreed to sell the cement unit to France's Lafarge for 8.8 billion euros ($12.81 billion).

Shares of OCI ended 4.3 percent lower at 521 Egyptian pounds ($94.21) despite initially surging more than 10 percent in volatile early trade shortly after the announcement was made.

"Ultimately the stock should fall to reflect the construction business and investments they have in fertilisers and natural gas among other things," said Tarek Shahin, analyst at Beltone Financial in Cairo.

The stock should be worth around 200 pounds pending any revision of earnings estimates or new investments, he said.

Cement accounted for about 70 percent of the company's net profit and about 40 percent of the company's revenues, said Aly Allouba, head of equities at Delta Securities.

"The cash cow has just been cashed in," he said.

Overall, the Case 30 index dropped 2.7 percent to 10,030.47 points as all but one stock on the index retreated. The Hermes index fell 2.9 percent to 88,120.16 points and the broader CIBC index shed 1.8 percent to 394.87 points.

Mobile operator Mobinil's shares fell 6.6 percent to 204 pounds in its sharpest single-day drop in more than a year. Orascom Telecom, the fourth-largest Arab mobile operator by market value, shed 4 percent to 87.10 pounds.

"Usually toward the end of the year there is a sell-off in the market as institutions take profits to book them in their yearly results," Allouba said. "Stocks that have had the most gains are the most hit today."

Shares of Mobinil have gained 14 percent this year and the Case 30 index has risen 45 percent.

Source: © Reuters 2007.