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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 CAIRO & ALEXANDRIA STOCK EXCHANGES Maged Shawky Sourial Chairman Our vision is to be the “Exchange of Choice” in the Middle East and North Africa (MENA) Region and as such we will spare no efforts to better serve our customers. In a year of mixed fortunes for markets, the CASE has continued to reinforce and improve its position in terms of benchmark performance. Our core trading business has performed exceptionally well during a period of increasing competition among markets. The CASE ranked top, compared to developed and emerging markets, tracked by Standard & Poor’s and Morgan Stanley indices. The well acclaimed magazine “Newsweek” pointed out that the CASE was one of the top and best performing markets in the world. The CASE market capitalization soared to $66 billion. Value traded increased sharply to $27 billion during the first half of 2006, around 155% increase over the same period last year and market capitalization as a percent of GDP exceeded 70% at the end of June 2006. The domestic market has seen significant growth in equities trading, which was mainly fuelled by the active participation of international and retail customers. Our vision is to be the “Exchange of Choice” in the Middle East and North Africa (MENA) Region and as such we will spare no efforts to better serve our customers. This year, we have worked on building and renewing our critical regulatory and infra structural platforms. Our commitment to develop a quality marketplace is indisputable. In line with our annual efforts, we released a set of new rules i.e. margin trading, intraday trading and some amendments in the listing rules. These measures were aimed at raising the responsibilities of intermediaries and facilitating mergers and acquisitions among issuers. These changes are important in continually improving the robustness of our marketplace. Furthermore, we have cemented our leadership in technology and driven ahead with an agreement with one of the key technology exchange companies worldwide, OMX Group, to establish a joint venture company in Cairo that will better serve the Egyptian, Middle Eastern and African capital markets. In the coming year, we plan to introduce new products such as Exchange Traded Funds. We will also be exploring new structured products and distribution channels for greater retail penetration. Furthermore, the CASE will focus its coming efforts on encouraging new domestic and regional listings. By constructing a market of quality listed companies, we are in a position to greatly advance the reforms of the Egyptian economy. Moreover, the CASE will continue its educational programs in collaboration with various universities in Egypt in order to enhance investor education. In its drive to be the major player in the MENA region, the CASE also strives to be recognized globally. Consequently, the CASE was the first Arab Exchange to be a member of the World Federation of Exchanges in 2005, which confirms the compliance of the CASE to international standards. We would like to thank our members and customers for supporting our marketplace, and the employees at the CASE for their hard work to achieve the CASE vision. HISTORY AND DEVELOPMENT The Egyptian Stock Exchange is comprised of two exchanges: the Cairo and Alexandria Stock Exchanges (CASE), and is governed by the same board of directors that share the same trading, clearing and settlement systems. The Alexandria Stock Exchange was officially established in 1888 followed by Cairo in 1903. The two Exchanges were very active in the 1940s, when the Egyptian Stock Exchange ranked fifth in the world. Nevertheless, the central planning and socialist policies adopted in the mid-1950s led to the demise of activity on the Exchanges, which remained dormant throughout the period between 1961 and 1992. In 1990, the Egyptian government started an economic reform and restructuring program. The move toward a free-market economy has been remarkably swift and the process of deregulation and privatization has stimulated stock market activity. In mid-1997, the Exchange started its modernization plan that included an overhaul of its trading system, listing and membership rules, OTC trading and investor education. The CASE aims to be one of the core financial centers in the Middle East North Africa (MENA) region, through the adoption of leading-edge technology, commitment to continuous improvement in its rules and regulations, the products and services it offers, and alliances forged with international markets. The CASE is striving to strengthen its competitive position by embracing a strong customer orientation, offering timely and secure services to investors, members and market participants as well as promoting the confidence and understanding of investors of its operations. In short, fairness, efficiency and transparency constitute our ongoing vision and ultimate objectives. FUTURE OUTLOOK The CASE is currently working on the following. • re-locate the Exchange to the Smart Village, being a main component of the regional financial center, • commitment to best practices (conduct standards and integrity), • increasing diversity of offerings, • continuous review of Listing and governance rules to ensure quality issuers on its main board, • introduce a new segment for SMEs and growing companies, • encouraging dual listings of blue chip companies, • introduce new trading mechanisms such as margin trading, short selling and online trading to further enhance market liquidity, • introduce Exchange Traded Funds and derivatives, and • spread market awareness and investor education all over Egypt. PAGE 68
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 CAIRO & ALEXANDRIA STOCK EXCHANGES OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jan-06 5,675.1 315.3 591.0 32.8 Feb-06 5,640.4 282.0 645.5 32.3 Mar-06 3,506.6 159.4 479.2 21.8 Apr-06 3,501.8 206.0 457.9 26.9 May-06 3,837.7 174.4 581.4 26.4 Jun-06 1,871.8 89.1 433.2 20.6 TOTAL 24,033.5 204.4 3,188.2 26.8 Bonds Jan-06 272.3 15.1 1.4 0.08 Feb-06 412.7 20.6 2.2 0.11 Mar-06 306.6 13.9 1.9 0.09 Apr-06 54.7 3.2 0.44 0.03 May-06 164.6 7.5 1.6 0.07 Jun-06 186.5 8.9 1.1 0.05 TOTAL 1,397.4 11.5 8.7 0.07 Other Jan-06 180.3 10.0 109.2 6.1 Feb-06 362.3 18.1 198.3 9.9 Mar-06 388.8 17.7 105.5 4.8 Apr-06 207.7 12.2 81.1 4.8 May-06 160.6 7.3 62.7 2.9 Jun-06 97.8 4.7 58.0 2.8 TOTAL 1,397.5 11.7 614.8 5.2 Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jan-06 92,528.3 7,930.0 Feb-06 85,370.4 7,092.0 Mar-06 78,203.7 6,768.0 Apr-06 76,664.6 6,634.0 May-06 69,698.8 5,364.0 Jun-06 65,577.3 4,772.8 CONTACT INFORMATION 6,000 5,000 4,000 3,000 2,000 1,000 0 8,000 100,000 7,000 90,000 6,000 80,000 70,000 5,000 60,000 4,000 50,000 3,000 40,000 2,000 30,000 20,000 1,000 10,000 0 0 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Contact Name Mr. Khaled Abdel Rahman E-mail karahman@egyptse.com Website www.egyptse.com PAGE 69
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