Egypt’s Prime Minister Mostafa Madbouly highlighted the Egyptian Exchange (EGX)’s crucial role in the government’s broader strategy to attract foreign investment and develop a more appealing investment environment in Egypt.
The Prime Minister made these statements during a meeting on Tuesday to review the progress made in efforts to enhance the performance of the EGX. The meeting was attended by Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), and Ahmed El-Sheikh, Chairperson of the EGX.
The government sees the stock exchange as a key platform for financing and investment, especially in light of its ongoing privatisation program. This program aims to list shares of state-owned companies on the EGX, thereby attracting more investment.
El-Sheikh outlined the EGX’s strategy for development, launched in September 2023 following extensive consultations with market stakeholders. The “EGX Board of Directors Strategy for Development,” issued in January 2024, sets out targets for boosting the stock market’s efficiency. The EGX aims to achieve these targets through close coordination and collaboration with market stakeholders and relevant entities, particularly the FRA.
The strategy, El-Sheikh explained, is a short and medium-term plan that responds to the market’s evolving needs and development priorities. It focuses on seven key areas:
- Developing a more robust general market framework
- Encouraging more listings
- Establishing new rules for listing financial instruments and securities
- Enhancing markets and trading mechanisms
- Activating new financial markets and instruments
- Promoting financial literacy, training, and strengthening international relations
- Integrating financial technology into the EGX and capital markets
Implementation of the strategy began immediately following its approval, El-Sheikh noted, guided by a comprehensive work plan that prioritises operational needs and stakeholder requirements. The plan aims to balance targets with quality outcomes and a positive impact on the overall market ecosystem.
Significant progress has been made in implementing the strategy up to August 2024. A contract has been signed to replace the current trading system, which has been in place since 2008, with a new system that will offer a comprehensive platform for trading all financial instruments and securities, including multiple markets. The new system will adhere to international standards and practices. Its implementation is underway according to a predetermined timeline.
The EGX has also begun updating its trading surveillance system to meet international standards and best practices.
Since the beginning of 2024, six new companies have been listed on the EGX, with three already trading their shares. Four companies have moved from the Small and Medium Enterprises (SME) market to the main market. The EGX aims to attract more large companies and economic entities for listing on the main market in the future.
The EGX has also launched the “EGX 33 Shariah” index to attract new investors and provide a new financial instrument. The index has received a positive response from various segments of the capital market, with three major asset management companies submitting requests to track funds linked to the index.
The EGX has also undergone a comprehensive restructuring of its market segments and linked market lists to indices. This restructuring aims to eliminate any overlap between previously used market segments and lists, fostering trading activity, increasing liquidity, and deepening the market.
Further measures have been taken to enhance market liquidity and trading volume, including adjusting the bid unit for shares to be a percentage of the closing price. The EGX has also established a registry for listing investor relations officers with listed companies and is continuing plans for ongoing training and skill development to enhance their capabilities. The EGX has also facilitated registration procedures for investment funds and foreign companies of all types on the stock market and extended the validity period of foreign institutional codes to match those of Egyptian institutions.
The EGX has completed all the necessary steps to launch the voluntary African Carbon Market platform, and trading has already begun. The EGX is currently studying the feasibility of trading International Renewable Energy Certificates (IRECs).
Other implementation steps highlighted include reducing the subscription period for capital increases for companies by issuing a Prime Minister’s decree to amend Article 31 of the Executive Regulations of the Capital Market Law, in coordination with the Financial Regulatory Authority.
The EGX is committed to strengthening constructive communication with all external stakeholders and international financial and business institutions. Ongoing efforts to promote financial literacy continue, including the fifth and sixth editions of the “EGX Development Conference” and the signing of several cooperation protocols with Egyptian universities.
The meeting also mentioned the renovation of the historical trading hall, transforming it into a main hub for conferences and meetings. The hall will also house the EGX Museum, a symbol of the Egyptian stock exchange’s rich history.
Further implementation steps include a joint study with the General Authority for Investment and Free Zones to link expansion in granting investment and tax incentives to listing and issuance on the EGX.
The EGX has witnessed unprecedented historical peaks between September 2023 and July 2024, demonstrating progress in line with the targets set out in the “EGX Board of Directors Strategy for Development – January 2024.” This progress has been driven by a continuous institutional approach, communication, and interaction with various market participants. These peaks include performance indicators, trading values and volumes, number of executed transactions, and the number of clients. The EGX30 main index reached its highest historical peak at 33,383 points on March 11, 2024. The market capitalization also reached its highest historical value at the end of the session on March 10, 2024, reaching approximately 2.2 trillion Egyptian pounds.
Meanwhile, the session on March 6, 2024, recorded the highest daily trading value without treasury bonds or authorised transactions, reaching EGP 9.7 billion. The session on February 25, 2024, witnessed the execution of approximately 280,000 transactions. The highest daily number of clients during a single session was recorded on February 25, 2024, at 49,966 clients. Additionally, the session on February 15, 2024, recorded the highest trading volume without treasury bonds or government debt instruments, reaching approximately 2.13 billion financial instruments.
The total daily trading value for all securities, including government debt instruments and authorised transactions, from September 2023 to July 2024, amounted to approximately 11 trillion Egyptian pounds, with approximately 226 billion financial instruments executed across about 26 million transactions.
