CAIRO: Egyptian investment bank EFG-Hermes led a fall on the Egyptian bourse on Thursday after it announced it would increase its capital by issuing more shares, traders said.
At an extraordinary general meeting the company said it would issue 16 million shares at LE 115 ($20.1) a share. It was also to offer existing shareholders a two-for-one rights issue later at the nominal price of LE 5 a share.
Traders said investors had bought on rumors of the widely expected increase, and sold to take profits after the decision was announced. EFG-Hermes in January said it planned to raise capital to buy a stake in Lebanon s Bank Audi.
People bought on the rumors and sold on the fact … Now there s nothing to expect … The selling was very aggressive and because it is one of the leading stocks, people panicked and sold other stocks, Mohamed Kotb, of Prime Asset Management, said.
Shares in EFG-Hermes, one the Egyptian bourse s most heavily weighted stocks, lost LE 31.8, or 11.6 percent, to end at LE 242.5.
Egypt s benchmark Hermes index ended the session 1,369.69 points or 2 percent lower at 67,625.04 points. The broader CIBC index fell 4.13 points to 276.32 points.
The bourse was further depressed by investors selling stocks to raise funds to take part in EFG-Hermes capital increase, supporting the stock slightly.
We had a lot of investors selling in order to get into the capital increase, a trader who declined to be named said.
One of the few stocks to gain in the session was Ezz Steel Rebars, which rose 12.59 pounds, or 13.3 percent, to end the session at LE 107, a record high for the stock.
Traders said the stock rose on rumors of expansion plans. The company was not immediately available for comment. Reuters
