CAIRO: Egypt’s stock exchange, in its semi-annual review, adjusted its three indices on Tuesday to reflect changes in the listed companies’ weighted value, after a turbulent year on the economic front.
“Every six months, they rebalance [the indices] depending on certain criteria…based on things like liquidity [and] market cap,” Mark Millar, head of research at Naeem Holding, told Daily News Egypt.
On the main EGX 30 index, seven companies — among them United Housing and Development, Giza General Contracting and Sinai Cement — were excluded while the exchange added Orascom Telecom Media and Technology Holding, Egyptian Electrical Cables and Universal for Paper and Packaging Materials (Unipack).
A recent demerger saw Orascom Telecom (OT) split into two companies: Orascom Telecom Media and Technology Holding and Orascom Telecom Holding (OTH).
More real estate and development companies were included on the broader EGX 70 index while companies like Misr Oils & Soaps, Egyptian Gulf Bank, Nile Cotton Ginning and Rubex Plastics were removed.
The EGX 70 also excluded National Cement, Namaa for Development and Real Estate Investment Co. and National Real Estate Bank for Development.
“Last year, most real estate companies were in the main index because they were the main movers in the market, now the volume of trading in real estate is really slow,” said Tarik Salama, a financial consultant who follows the bourse.
“The weight value in the market of each company is divided by each index, otherwise the index will not be effective.”
Since last year’s uprising, Egypt’s real estate sector, which was once booming, took a hit as investors shied away from long term, concrete investments.
Companies like Sixth of October Development and Investment (SODIC) as well as Palm Hills Development (PHD) and Talaat Moustafa Group (TMG) saw their shares plummet partially due to the economic crisis and also because of land disputes with the state.
Palm Hills, for example, returned 9 million square meters in Mars Matrouh governorate to the state in order to avoid land liability charges.
Many real estate companies have come under fire, some facing court disputes, for acquiring land through direct contracts from the former regime at undervalued prices instead of through public auction. The most infamous case has been TMG’s Madinaty development.
Egypt’s telecommunication sector has also been an attractive market, according to analyst Ahmed Adel, at Naeem Holding, who previously told DNE that this year the telecom sector would see more trading since last year carried many restrictions for the field.
Salama also pointed out that most of the trading volume these weeks is in telecoms.
The EGX 100 excluded Nile Cotton Ginning, Rubex Plastics and Misr Oils & Soaps while adding Lecico Egypt, Orascom Development Holding (AG) and Wadi Kom Ombo Land Reclamation.
The EGX 30 adjusted seven companies, the EGX 70 removed and added 20, while the EGX 100 adjusted 16.
“These changes reflect how the market is behaving, companies that are making more gains will be moved to the main index, based on their weighted average,” said Salama.
