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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011
EGYPTIAN EXCHANGE
The Egyptian Exchange has marked the
year 2010 as the year for rebuilding
investor’s trust.
Mohamed S. Abdel Salam
Chairman
We would like to inform all market participants
including issuers, member brokers, asset managers,
local and foreign investors, media, the public at large
etc. that the Egyptian Exchange (EGX) will resume
trading tomorrow Wednesday 23 March 2011.
There were delays several times in our opening due
to unprecedented events that followed Youth
Revolution on 25 January 2011. Since our last
communiqué, several changes took place. First
and most importantly there was a newly appointed
Prime Minister, Dr. Essam Sharaf, on 3 March 2011
with high public approval ratings. EGX could not
open before the approval from the Prime Minister
due to a change in the executive regulations of the
Capital Market Law on 17 February 2011, whereby
all non-banking financial services, including EGX,
follow the Prime Minister directly. Dr. Sharaf
appointed a new Minister of Interior and since then
security and safety are being restored in most
areas of Egypt and there is negligible presence of
the Armed Forces in the streets of Cairo. Also,
there is a noted reduction in the number of
employees’ demonstrations regarding salary raises.
The banking sector is operating normally.
During this period, the Chairman of the Egyptian
Financial Services Authority, Dr. Ziad Bahaa El Din
resigned and also the Chairman of EGX, Dr. Khaled
Serry, resigned but his resignation was only
accepted yesterday. Mr. Mohamed Abdel Salam,
the current Chairman of Misr for Central Clearing
Depository and Registry (MCDR), was appointed as
Chairman of EGX for the coming six months.
There is cautious optimism due to the recent
unprecedented voting on some Articles of the
Constitution. The process went very well in terms of
the people turnout 41% (18 million) given that in
previous elections the turnout never exceeded 3%,
in addition to the transparency, independence and
fairness of the voting process itself. This is a very
important milestone in Egypt’s road towards
democracy that was not witnessed since the last 60
years.
Another important reason for our cautious optimism
is the various campaigns on Facebook that were
initiated by the Youth to support the stock market
when it opens. A very recent TV campaign started
yesterday and included very prominent and famous
figures including the current Prime Minister.
Moreover, various Egyptians Associations abroad
have contacted EGX in order to learn the logistics
of investing in the market as several of their
members are enthusiastic to invest now in Egypt.
Egypt's General Prosecutor continued to issue
several travel bans against prominent state and
businessmen figures, including some former
Ministers, and has frozen their cash, equity and
bonds holdings accounts. A list of these names is
always updated on EGX web site.
We acknowledge that the closure of EGX is
unprecedented but it was a very critical period due
to the various events impacting Egypt, its security,
economy, and industry and capital
markets.
In our earlier communiqué, we mentioned that EGX
in consultation with the market regulator and the
clearing company will undertake some temporary
measures, with the aim of reducing panic when we
resume trading and help restore stability in the
capital market. We will also be more diligent in our
market surveillance efforts to ensure that the trades
done by offshore funds that are incorporated in
less regulated markets do not involve any banned
names by the General Prosecutor since their cash,
equity and bonds holdings are already frozen on
the domestic market.
We are confident that despite the expected volatility
on the resumption of trading, calmness will be
restored as we proceed. We apologize to our
clients for the delay in resuming trading but hope
that they understand the justifiable reasons behind
the closure. We indeed have learnt a lot from the
recent events, which will make us much more
determined in pursuing our future plans and
strategies for EGX.
In conclusion, EGX management is confident that
when the Parliamentary and Presidential Elections
take place within six months, Egypt will move
forward towards democracy, which will enhance its
stability and our market will of course reflect these
positive steps.
We thank you all for your understanding and
continued support for the Egyptian capital market.
HISTORY AND DEVELOPMENT
The Egyptian Exchange (EGX), formerly Cairo &
Alexandria Stock Exchanges (CASE), dates back to
more than 125 years. Operating through two
locations, the Alexandria Stock Exchange was
officially established in 1883, followed by Cairo
Stock Exchange in 1903.
Despite the repercussions of the global financial
crisis, the Egyptian market has shown a good
performance during 2009 with its main index EGX
30 concluding the year with an annual increase of
35%. On the other hand, EGX has been able to
achieve good trading records in 2009, with a total
trading value of LE 448 billion compared to LE 530
billion in the previous year. However, the volume
traded soared to 37 billion securities in 2009
compared to 26 billion securities in 2008, surging by
43% compared to last year. Likewise, the number of
transactions recorded 15 million transactions this
year versus 13.5 million in 2008. In its efforts to
continue the enhancement of the market activity and
transparency, EGX launched 2 new price indices;
EGX 70 Price Index, that measures the performance
of the 70 active companies, after excluding the 30
most active constituent-companies of EGX 30 Index,
as well as EGX 100 Price Index, that tracks the
performance of the 100 active companies, including
both the 30 constituent-companies of EGX 30 Index
and the 70 constituent-companies of EGX 70 Index.
Both indices, EGX 70 index and EGX 100, soared
during 2009 to conclude the year with an increase
of 33% and 36%, respectively.
From another perspective, the Listing and De-listing
Rules were amended to ensure further enforcement
of corporate governance and to retain and attract
quality issuers as well as regulating the trading of
EDRs and ETFs.
In its endeavor to keep abreast with technological
advancements in order to be the Premier market in
the Middle East North African (MENA) Region that
best serves its stakeholders, EGX signed an
agreement with London SE to connect the 2
markets via FIX connectivity system. This will
facilitate capital flow from London to Egypt and vice
versa and set EGX as the hub in the Middle East
and African region. Additionally, EGX launched a
new version of its website; www.egx.com.eg, that
includes a wealth of information about EGX indices,
issuer information, market data, education corner,
international relations and information services, with
a better navigation, more user-friendly interface and
easier access to information.
On the international front, EGX has signed during
2009 memoranda of Understanding with several
Exchanges, namely; Casablanca SE, Shenzhen SE,
Amman SE, Libyan Stock Market and the Iraqi SE.
The MoUs tackled the areas of mutual cooperation
on capital markets' developments including
exchange of information, experts, staff and
experiences for the respective benefit of the
securities markets. These developments are
expected to promote the activity of the Egyptian
market, which has been perceived as one of the
most developed emerging markets during the past
years.
FUTURE OUTLOOK
EGX will continue exerting efforts to enhance the
efficiency of the market, raise investors' awareness,
promote the financial literacy, and improve the
communication between EGX and its stakeholders
to further strengthening their trust in the market.
Moreover, EGX will continue its aggressive
marketing plan to attract the big companies to be
listed in the market. On the other hand, EGX strives
to build on its success by accelerating the
introduction of a bundle of new investment products
and mechanisms into the Egyptian market such
ETFs, sukus, the Market Maker system which is
expected to be launched in the first half of 2011.
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