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. PAGE 60
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011 EGYPTIAN EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jul-10 2,153.83 102.56 2,002.98 95.38 Aug-10 2,313.70 110.18 1,956.47 93.17 Sep-10 2,539.96 127.00 2,273.75 113.69 Oct-10 2,863.38 143.17 2,713.29 135.66 Nov-10 2,708.51 142.55 2,456.58 129.29 Dec-10 2,630.56 125.26 1,926.47 91.74 TOTAL 15,209.00 125.12 13,309.54 109.82 Bonds Jul-10 1,074.19 51.15 6.24 0.30 Aug-10 727.99 34.67 4.75 0.23 Sep-10 1,093.23 54.66 6.11 0.31 Oct-10 1,132.95 56.65 6.41 0.32 Nov-10 1,509.52 79.45 8.85 0.47 Dec-10 751.64 35.79 5.20 0.25 TOTAL 6,289.52 52.06 37.56 0.31 Other Jul-10 192.68 9.18 60.12 2.86 Aug-10 268.21 12.77 106.96 5.09 Sep-10 339.08 16.95 442.75 22.14 Oct-10 223.44 11.17 193.09 9.65 Nov-10 159.35 8.39 229.01 12.05 Dec-10 596.46 28.40 344.48 16.40 TOTAL 1,779.21 14.48 1,376.41 11.37 Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jul-10 74,417.65 6,184.91 Aug-10 75,715.80 6,409.93 Sep-10 78,571.48 6,634.27 Oct-10 79,155.72 6,670.34 Nov-10 82,988.37 6,704.83 Dec-10 84,102.97 7,142.14 CONTACT INFORMATION 3,000 2,500 2,000 1,500 1,000 500 0 8,000 90,000 7,000 80,000 6,000 70,000 5,000 60,000 4,000 50,000 40,000 3,000 30,000 2,000 20,000 1,000 10,000 0 0 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec Contact Name Ms. Heba Serafi E-mail Heba.Serafi@egx.com.eg Website www.egx.com.eg PAGE 61
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