MARKET WATCH: Change Agent
MARKET WATCH: Change Agent
STOCK ANALYSIS: ODIN Investments (ODIN)
Written for Business Monthly - September 2022 Issue
MARKET WATCH
Change Agent
For a change, the EGX 30 and EGX 70 EWI ended the period from July 15 to Aug. 15 on positive notes. Not only was it a positive note, but an outstanding one with both indices posting double-digit returns. The former was up 13.1%, and the latter was up 25.8%. On a year-to-date basis, the EGX 70 EWI was down 3.2% but still outperformed the EGX 30, down 17%. It looks like the market has found a bottom, with advances outnumbering declines by a ratio of nine to one. The EGX 30 bottomed out on July 6, when it hit a 6-year low of 8,599.05. Two days earlier, the EGX 70 EWI hit a two-year low of 1,655.58.
The ultimate change agent for this recovery was unclear. However, one can list a few factors that may have led to the market’s strong performance over the past period. First, interest by GCC sovereign wealth funds suggested Egyptian stocks were very cheap for those investing for the long haul and set a floor for the stocks they acquired. Second, replacing the head of the market’s watchdog sent a calming message to individual investors. Third, a gradual depreciation of the Egyptian pound by 1-2 % over the past month meant stocks became even cheaper in U.S. dollar terms.
Elsewhere, the market witnessed two key trends: certain listed companies declaring and executing share buyback programs and interest by strategic or financial investors. On the one hand, Elsewedy Electric (SWDY, up 19.2%), among other companies, continued to buy back shares given their depressed stock prices.
On the other hand, PACHIN (PACH, up 14.6%) received acquisition offers from Saybad Industrial Investment and Sipes. Meanwhile, Madinet Nasr Housing & Development’s (MNHD, up 7.4%) board claimed the offer made by SODIC (OCDI, up 8%) does not properly value the company. But an offer to acquire as much as 90% of Beltone Financial Holding (BTFH, up 31.5%) went through, with U.A.E.-based Chimera Investment eventually ending up with a 56% stake in the company. Only Orascom Financial Holding (OFH, up 13.4%) accepted Chimera’s EGP 1.485-a-share bid. Later, BTFH’s stock rose in anticipation of the new owners adding value to the company down the road. Also, U.A.E.-based ADNOC Distribution acquired a 50% stake in TotalEnergies Marketing Egypt, leaving B Investments Holding (BINV, up 6%) with the options of tagging along or making an offer under the same conditions.
STOCK ANALYSIS
ODIN Investments (ODIN)
ODIN Investments (ODIN) is up 29% year-to-date after jumping more than 137% from July 15 to Aug. 15. After the demerger that took place in the second half of 2021, demerged unit ODIN Investment & Development (ODID) focused on the real estate, industrial, commercial and tourism sectors. Meanwhile, ODIN focused on capital markets operations, ranging from portfolio and fund management to venture capital. Having changed its fiscal year to end on June 30, ODIN last reported a net loss of EGP 3.7 million for six months versus EGP 1 million for all of 2021.