TAQA Arabia’s stock surge by 3900% after first day puzzle
The market indices rebounded at the end of the day after a sharp decline on Sunday.
The benchmark index EGX30 jumped 2.46 percent to close at 16,963 points.
The EGX70 index surged 4.33 percent to end at 3,374.25 points, while the EGX100 rose by 3.96 percent, closing at 5,009 points.
Block trading deal
The EGX exempted a block-trading deal of 4.5 million shares, valued at EGP 3.6 billion ($117 million), from the cancellation of Sunday's transaction on TAQA Arabia.
According to disclosures released by the EGX on Monday, the substantial stake was sold by Canada-based Silver Stone Capital Investment to UAE's Rimco EGT Investments and US-based Financial Holdings Investments.
Rimco increased its stake in TAQA from 0.174 percent to 14.49 percent by buying 193.5 million shares for EGP 1.7 billion.
Meanwhile, Financial Holdings increased its stake in TAQA from 3.55 percent to 17.78 percent after buying 192.4 million shares for EGP 1.7 billion.
Thus, Silver Stone's stake in TAQA decreased from 79.81 percent to 49.13 percent.
Another majority stake owner in the company is Qalaa Holdings, with a 55.3 percent indirect stake.
A first-day shock
TAQA Arabia, the Cairo-based energy firm, listed on Sunday 1.35 billion shares worth EGP 676.2 million ($22 million).
On its first day, TAQA Arabia’s stocks exploded at an unimaginable rate that exceeded 80,000 percent.
The bourse's management interfered and cancelled all transactions on the stock, which jumped from EGP 0.5 to more than EGP 400 in a few hours.
“The Egyptian Exchange approved requests submitted by Hermes Securities Brokerage and some other securities brokerage firms to cancel TAQA Arabia transactions executed during today's trading session. About 75 transactions were mistakenly executed by some individual investors with a value of around EGP 395,000 on the first trading day of TAQA Arabia,” a statement read on the EGX website on Sunday.
Later on Sunday EGX’s Chairman Rami El-Dokany explained that “the bourse has waived the price limits on TAQA as it typically does for stock debuts. The block-trading transaction at the stock's fair value, which amounts to EGP 8.9, was followed by unjustifiable jumps. Only 76 transactions were executed on the stock with limited liquidity,” he told Al-Hikaya TV show on MBC Masr.
He noted that orders at the 400ish price of the stock were only placed at online trading platforms and that the accident is under investigation by the EGX and the Financial Regulatory Authority.
The impact on the market
"The market is waiting for the announcement of the free trade percentage for TAQA Arabia, which would amount to 10 percent of the total listed shares, according to EGX regulations," Investment Funds Director at Odin Investments Mohamed Hassan told Ahram Online.
"Generally, the stock market suffers outflows of foreign liquidity, and much is pinned on the Prime Minister's announcement, in a press conference on Tuesday, of the progress of Egypt's privatization," Hassan added.
The expert went on to say that "closing deals with huge figures would give a great push to the stock market. Otherwise, a sharp decline may be anticipated."