* Egypt's 2.3 pct loss is biggest in three months
* Tax evasion charges could threaten OCI buyout offer
* Negative signal on government-business relations
* Banks keep weighing on Saudi Arabia
* Arabtec continues plunge on dilution in Dubai
By Nadia Saleem
DUBAI, March 4 Egypt's bourse suffered its
biggest one-day loss in three months on Monday after the chief
executive of its largest listed firm was banned from leaving the
country on charges of tax evasion - a fresh blow to business
confidence in the country.
The public prosecutor ordered that Nassef Sawiris, chief
executive of Orascom Construction Industries, and his
father Onsi Sawiris be barred from travel, state news agency
MENA reported late on Sunday.
The order was part of an investigation into accusations they
evaded about 14 billion Egyptian pounds ($2.1 billion) of taxes
during the sale of Orascom Building, an OCI subsidiary, to
French firm Lafarge, it said.
A banker and friend of the family told Reuters that the men
were out of the country. In a statement to the bourse on Monday,
OCI said that beyond a previous request by the Egyptian Tax
Authority for the company to pay 4.7 billion pounds related to
the Lafarge deal, which it had appealed, it had not received any
additional claims from the government.
Shares in OCI sank 3.6 percent to 250 Egyptian pounds as
investors feared legal problems would put its buyout offer from
Dutch-listed subsidiary OCI NV in jeopardy.
OCI NV offered in January to acquire all the ordinary shares
of its parent through a swap offer for its shares in Amsterdam,
and gave investors an option to sell at 280 pounds per share.
"The execution of the exchange offer will most likely be
delayed as the Egyptian Financial Supervisory Authority will
refrain from taking this responsibility until the claim is
resolved," Pharos Holding said in a note.
All except two stocks fell in Cairo's main index.
The index retreated 2.3 percent to 5,375 points in its heaviest
one-day loss since Dec. 6; it reached a nine-week low.
The index's break below major support on the late January
low of 5,489 points was technically bearish, triggering a double
top formed by the January and February highs; the pattern points
down to around 5,200 points in coming weeks.
Beyond the immediate impact on OCI, the Sawiris news fuelled
concern about poor relations between Egypt's post-revolution
government and senior members of the pre-revolution business
community, which could fuel capital flight from the country.
"Criminally pursuing the CEO of Egypt's largest listed
company after the government drafted a law to reconcile with
businessmen sends a very contradictory signal," said Mohamed
Radwan, director of international sales at Pharos Securities.
In Saudi Arabia, banks led declines as investor sentiment
continued to weigh on the sector in the wake of last month's
fourth-quarter earnings, which mostly showed weak growth. Al
Rajhi Bank and Samba Financial Group each
slipped 1.1 percent.
The kingdom's benchmark dropped 0.5 percent to its
lowest close since Jan. 2.
Elsewhere, United Arab Emirates markets declined with
property-related stocks the main drag. Dubai builder Arabtec
plunged 10 percent to a 13-month low of 2.17 dirhams
as investors dumped the stock ahead of a planned capital
increase that will be dilutive to shareholders.
The stock has fallen 27 percent in three sessions since the
company announced plans to raise $1.8 billion in capital.
Analysts said it could continue to fall until it reached around
1.50 dirhams, a price at which the rights issue would be
Dubai's benchmark retreated 1.9 percent to a
In neighbouring Abu Dhabi, shares in Aldar Properties
and Sorouh Real Estate, which plan to merge,
tumbled to two-week lows as investors booked recent gains. The
pair dropped 5.2 and 3.7 percent respectively.
Both stocks have more than doubled in price over the past
year in anticipation of the state-backed merger. Sorouh is still
up 43.7 percent in 2013, while Aldar has gained 14.8 percent.
A majority of shareholders at both companies approved the
merger on Sunday. Sorouh shareholders will receive 1.288 Aldar
shares for every share they hold in Sorouh, which will then be
delisted on completion of the merger.
"Aldar and Sorouh should be trading within the range of the
swap - people may be reducing some positions after the news of
the merger," said Ali Adou, portfolio manager at The National
Investor. Aldar was expected to be under slight selling pressure
as it adjusts to the swap, he added.
Abu Dhabi's index slipped 0.3 percent, down for a
third consecutive session since Wednesday's 40-month peak.
* The index dropped 2.3 percent to 5,375 points.
* The index fell 1.9 percent to 1,899 points.
* The index declined 0.3 percent to 3,026 points.
* The index slipped 0.5 percent to 6,957 points.
* The index climbed 0.2 percent to 6,487 points.
* The index retreated 0.2 percent to 8,514 points.
The index advanced 0.3 percent to 6,001 points.
* The index slipped 0.3 percent at 1,094 points.