Egyptian stock market
The Egyptian stock market rose today (Monday) to a seven-week high. The EGX 30, the country’s primary index, rose 2.3 percent to close the day at 4815, spurred by both international and Arab investors. One of the factors for the increase was approval of a deal to sell Egypt’s second-largest mobile company, Mobinil
, to a French telecom company. The impact of the decision by Egypt’s national gas companies to stop sales of natural gas to Israel
remains to be seen.
Telecommunications stocks in general performed well today. The Egyptian Co. for Mobile Services (EMOB EY) rose 6.5 percent to 191.72 Egyptian pounds, and Orascom Telecom Media & Technology Holding SAE (OTMT) gained 4.2 percent to reach 1.50 pounds. Orascom is selling its stake in Mobinil, Egypt’s second-largest mobile company, to France Telecom SA (FTE) at a price of 202.5 pounds per share, to earn about 6 billion pounds. The deal was approved today by market regulators.
Earlier, the national Egyptian gas companies, the Egyptian General Petroleum Corporation and the Egyptian Natural Gas Holding Company, announced that they were canceling the 2005 20-year contract to supply Israel with natural gas. Although both the Egyptian and Israeli governments are saying that the termination of the contract is a commercial issue, with the Egyptian companies complaining of Israeli non-payment, the major Egyptian presidential candidates have supported the cutting off of gas for commercial reasons.
The economic impact of refusing to sell gas to Israel remains to be seen. Although the shipment of gas has generally been disrupted over the past year due to attacks on the pipeline connecting Egypt and Israel, the willingness to sell gas is considered a pillar of the 1979 peace treaty. Arab economists are beginning to express concern about what the move means for Egypt, both because it serves to cut off another source of income at a time when Egypt desperately needs money, and because it possibly sends a negative message to other countries regarding Egyptian stability and reliability. The Egyptian government claims the companies made the decision to cancel the agreement without informing the government beforehand.
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