[2008-08-01]  CIB shares surge after dividend, lift Egypt index
Commercial International Bank posted its sharpest daily gain in 22 months on Thursday, lifting Egypt's index as investors bet a stock dividend would pay high returns.

Shares of Egypt's largest lender by market value, down nearly 20 percent this year to Wednesday's close, surged 5.17 percent to 50.49 Egyptian pounds ($9.51). The bank gave a dividend on Thursday of one share for every two held.

"The pattern and history of the stock is that the dividend pays well due to the solid fundamentals of the company," said Mohamed Radwan, trader at Pharos Securities. "Every time the dividend is given the share price tends to move up."

Overall, the benchmark CASE 30 index rose 1.28 percent to 9,251.19 points, while the well-watched Hermes index rose 0.93 percent to 801.48 points. The broader CIBC index climbed 0.51 percent to 453.71 points.

CIB, which posted 67 percent growth in first quarter profit, is trading at 10.63 times estimated 2008 earnings compared to a sector average of 11.37 times, according to Reuters data.

Shares of Mobinil, Egypt's largest mobile operator by subscribers, jumped 3.76 percent to 150 pounds. The company has said it would release its first half results on August 10.

"People are expecting strong growth because of the overall expansion in the mobile market," Radwan said, without giving specifics.

Shares of Ezz Steel, Egypt's largest steel maker by sales, gained 2.25 percent to 76 pounds after it said it would raise its capital to fund expansion.

Shareholders could buy two new shares for every one held to finance expansions in Egypt and Algeria, the company said.

Investors anticipated the expansion would boost profit, said Mohamed Ebeid, trader at EFG-Hermes investment bank.

"The new plant they are building should reduce operating costs dramatically," he said.
Source: © Reuters 2008.