An outside observer could be forgiven for thinking that Egypt's capital market renaissance was coming unstuck earlier this year. When the government floated 10% of its holding in the Misr Aluminium Company on the Cairo Stock Exchange in January, investors voted with leaden feet, taking up less than 80% of the shares on offer.
But analysts in Cairo say that this slow take-up had little to do with the company itself and even less to do with Egypt's very solid macroeconomic indicators. It was purely a product of the price set by the government. At E£71.25 ($21) a share the government was asking investors to stump up more than 15 times 1997 earnings and a multiple approaching 12 times 1998 earnings for a stock paying a dividend yield of 3.6% in 1997 and an estimated 6.9% in 1998. In a market where...
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