CAIRO: Seeking more exposure on international markets, the chairman of the Egyptian bourse signed Wednesday a Memorandum of Understanding with the Cyprus Stock Exchange that would enhance exchange of information and trading systems.
“Cyprus has become a member of the European Union.and cooperating with their stock exchange could facilitate and boost our presence in the European market, said Maged Shawky, chairman of the Cairo and Alexandria Stock Exchange (CASE).
“Cyprus Stock Exchange has an agreement with Athens stock market, which is huge, very well advanced and has strong [ties] with decision makers in London, he added. “Turnover on Cyprus stock market used to reach ?2 million. After the agreement with Athens, turnover now reaches ?17 million, leaping several folds in one year.
He explained that the Egyptian stock market could benefit from Cyprus’ agreement with Athens and replicate it with other regional and international stock markets.
The MOU incorporates cooperation in information exchange and communication regarding regulatory issues including listing criteria, membership standards, corporate governance measures, and traded products such as options, futures and Exchange Traded Funds (ETFs), investor education, as well as awareness and staff training.
Information exchange on ETFs is particularly important for Egypt’s bourse at this stage, as it plans to launch an ETF based on the CASE 30 index in the coming months as well as stock and index futures and options next year with the aim of doubling the current daily trading volume of $150-$180 million over the next two years.
Morgan Stanley told Reuters this week it expected Egypt s first ever ETF for big cap equities to attract foreign institutional investors looking for safer havens in the global credit crisis. It is also looking to attract local investors.
“We don’t want this MOU to be ink on paper . This cooperation does not only aim at increasing turnover. But also we want to benefit from their experience with Athens . which is exposed to international markets, stated Shawky.
Besides establishing relations between the two markets, the MOU could pave the way for Egyptian companies to be listed on the Cyprus stock exchange and other European markets in the future.
“Egyptian companies can set foot in Europe through Cyprus . which [would enable them to generate] a lot of liquidity and grow, said George Kofaris, chairman of the Cyprus Stock Exchange. “Securities industry in Egypt is going through dramatic changes, and the catalyst for that is liquidity and more products.
According to Reuters, Cairo s CASE 30 – which groups the stocks of the top Egyptian companies in a benchmark index – rose more than five-fold since Egypt launched an economic reform drive in July 2004. Last year the CASE 30 rose 51.3 percent.
Kofaris added that the MOU with Egypt served Cyprus’ hopes to become a hub for securities trading. That is why Cyprus signed in November 2006 an agreement with Athens, and it is currently in the process of signing similar agreements with Shanghai and Malta.
Shawky revealed future intentions to enhance cooperation with Cyprus Stock Exchange by allowing Egyptian companies to enlist on European markets. He also assured investors that derivatives would start trading on the CASE next year.
The Egyptian stock exchange, he said, was putting in place a new trading platform built by Nordic bourse OMX AB in order to increase trading capacity and offer derivative financial products by the middle of 2009.
We are very open to what the issuers want to offer. We get a sense that there is interest for contracts regardless of whether it is futures or options on the index as well as for the underlying stocks, he told Reuters on the sidelines of an Egyptian investment forum at the New York Stock Exchange held this month.
