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 P/E multiples had fallen in many cases to single digits and where companies historically paid very high dividends, this was viewed as miserly in the extreme. It was also seen as an outrageously high price in comparison with some of the company's global competitors.