Trading in Ezz Steel and Al Ezz Dekheila halted

Egypt's stock exchange halted trading in Ezz Steel and Al Ezz Dekheila for failing to comply with its demand for full financial statements.

"Both stocks have been temporarily suspended," Mohamed Abdel-Salam, the chairman of the Egyptian Exchange, said yesterday. "The companies have contacted the exchange and committed to provide the statements by the end of this week," he said.

The stock exchange said on July 6 that it gave the companies 15 days to report their results for all of last year and for this year's first quarter or face a trading suspension. Ezz Steel provided a 2010 standalone statement on July 19, reporting a 53 per cent drop in net income to 116.1 million Egyptian pounds. Al Ezz Dekheila is 55 per cent owned by Ezz Steel, whose former chairman, Ahmed Al Ezz, is one of several businessmen who have been investigated by the country's prosecutor general this year for possible corruption. He has denied all wrongdoing.

Al Ezz Dekheila "also has more than 25 per cent of its shares owned by several entities, which under Egyptian law requires statements to be checked by the central auditing organisation", Mr Abdel-Salam said. "Due to the association of the company with Ahmed Al Ezz, it's taken more time. The body needs to study the statements more carefully, to make sure everything is OK and has no problems," he said.

Ezz Steel and Al Ezz Dekheila last traded on Thursday at 9.65 Egyptian pounds and 641.44 pounds, respectively. In March, the investment bank CI Capital downgraded Ezz Steel from "strong buy" to "sell". "Given the ongoing unrest, we believe construction and real estate are among the sectors that will be negatively affected, as individuals will be reluctant to buy new real estate units, given the existence of a potential liquidity problem that will hinder the payment of related instalments," said Hany Mohamed Samy, an analyst at the Cairo bank.

"Consequently, local real estate developers will not commence new projects, leading to lower demand for steel rebars.

"Moreover, we believe the current political instability in the [Middle East and North Africa] region and the hike in crude oil prices will delay the global economic recovery, dealing further damage to the industry."

halsayegh@thenational.ae