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Rising Hope For Orascom Telecom Stocks
Published Jan 16, 2012
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Egyptian stocks ended the week at the highest level in nearly one month as traders are hopeful of Orascom Telecom’s return to trading.
This comes after a tentative deal to solve the ongoing dispute between Egypt’s leading telecom operator and the Algerian government over its unit in the country was reached.
Investors in Egypt targeted the heavyweight stocks which were hardest hit in the market’s steep decline last year, with property developer Talaat Moustafa Group up 5.4 percent and Ezz Steel gaining 5.8 percent.
But the hopes lie with Orascom, which has seen its share price drop as a result of the long-lasting dispute with the Algerian government over the Djezzy unit. Last week, however, Vimpelcom – the company that purchased most of Orascom last April – said it had come to an agreement with the Algerian government to sell the stake.
The sides were waiting for a price agreement to finalize the deal.
OT’s local shares have been suspended since 24 November pending its split into two listed companies – a second listing, Orascom Telecom Media and Technology, will include the assets excluded from Vimpelcom’s take-over – but the firm’s global depositary receipts have gained 18 percent this week.
“The rise in the GDRs is all because of Djezzy. If the stocks start trading in the next couple of days they will catch up with the GDRs. Both should rise by at least 25 percent,” said Ahmed Abu Taleb, foreign sales trader at Pharos Securities.
“If Orascom’s two listings were to gain 10 percent, it would lift Cairo’s main share index by 1 percent,” he added.
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