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Egypt’s NSGB drops after QNB deal; most Mideast markets slip

DUBAI: Shares in Egypt’s National Societe Generale Bank plunged after parent Societe Generale’s agreed to sell its majority stake to Qatar National Bank, dragging Cairo’s bourse from a three-week high.
QNB’s deal valued the entire bank at $2.6 billion, which is less than the bank’s current market value of about $ 2.7 billion, according to Reuters’ data.
NSGB dropped 10 percent to finish at 35.42 pounds ($ 5.75), near the deal price.
SocGen is selling its 77 percent stake in NSGB for $ 2 billion, although QNB has to offer to buy the remaining stock for the same price under Egyptian market rules.
“At 1.9-times book value, it’s a fair price. QNB is over-capitalized and the NSGB deal will help them maintain a higher than 18 percent ROE (return on equity),” said Ali Adou, portfolio manager at The National Investor.
The valuation for NSGB — below market value — also weighed on other banks. Commercial International Bank declined 3.4 percent.
Most other stocks gained. Palm Hills Development rallied 7 percent and Orascom Telecom gained 3.8 percent.
Cairo’s index advanced 0.09 percent, up 42.1 percent year-to-date. The market volatility has reduced ahead of a vote on a draft referendum on Saturday.
Elsewhere, UAE markets ended mixed and the country’s two telecom operators remained actively traded stocks after the government set new royalty fees earlier this week.
Shares in Abu Dhabi’s Etisalat rose 3.1 percent, recovering from Wednesday’s six-month low.
The stock plunged after the government on Monday said Etisalat would now pay royalties, or taxes, on revenue as well as profit. The government also said it would steadily increase royalty fees for du over the next few years.
Analysts say the decline was overdone and firms will benefit from extra cash in the short term. The two telecom operators anticipated higher royalties and provisioned accordingly for the first three quarters of 2012.
Dubai-listed du resumed its decline after Tuesday’s small gain. The stock fell 1.7 percent to AED 3.45, its lowest close since Sept. 26.
“We...see a major positive catalyst in two and a half months time — du is poised to announce record profits for the fourth quarter of the year 2012 due in early March 2013,” Peter Molik, chief financial officer and head of financial advisory at MENA Corp. said in a note.The company changed its recommendation for du to ‘buy’ from ‘hold’ with a target price of AED 4.
Abu Dhabi’s measure bucked the regional trend and gained 0.3 percent, but closes 2.3 percent lower for the week. Dubai’s benchmark slipped 0.2 percent, down 1.5 percent this. Declines on the two telecom operators were the main drag.
In Qatar, the index slipped 0.2 percent, extending year-to-date losses to 5.1 percent.
Losers outnumbered gainers 13 to five. Commercial Bank of Qatar fell 2.4 percent and Qatar Telecom shed 1.4 percent.
Shares in Qatar National Bank (QNB) bucked the trend and gained 0.9 percent the day after announcing its Egyptian buy.
Elsewhere, Kuwait’s benchmark and Oman’s measure ended flat.

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