Almost 15 years after the Alexandria Stock Exchange was established, Cairo's merchants and brokers started considering setting up their own bourse. In May 1903, the old premises of the Ottoman Bank (today's Groppi-Adli branch on Maghrabi Street) was chosen as the temporary official headquarters of the Bourse Khediviale du Caire. An international competition was held for the design of a new building to be located at the centre of Cairo's European district, not far from the National Bank of Egypt, which is the current Central Bank's headquarters. In April 1907, the award-winning French architect Raoul Brandon, designer of the Cairo Orosdi-Back department store, known as Omar Effendi, won the best design prize. These were heady days for the bourse —it was ranked among the world's top-five stock exchanges. Egypt's economy was at an all-time high and the number of companies that traded on the Cairo Bourse alone reached 228 with a combined capital of LE91 million. Compare that to a market capitalisation of LE421 billion during the first week of December 2015. While Egypt had one of its best stock exchanges in 2014, with a 30 per cent gain during the year after several slumps following the January 2011 Revolution, its fortunes witnessed another swerve in 2015 when the EGX30 index declined by almost 23 per cent by early December. Also, market capitalisation declined by 16 per cent. A handful of factors weighed on the market indices during the year, including the dollar shortage, energy crisis and violent terrorist incidents in Sinai, as well as geopolitical risks. There was also turmoil in emerging markets after China devalued its currency. In Sigma Capital's view, forex capital controls and the opaqueness of economic decision making remain the two most “legitimate” concerns of investors in the local investment bank. The capital controls imposed by the Central Bank of Egypt, together with forex shortages, hurt some of the listed companies' operations and limited the ability of foreign investors to repatriate their profits back home in dollars. A closer look at the performance of the market's main index, the EGX 30, reveals it has been mostly a downward trend in 2015. The index, which includes the 30 largest companies listed on Egypt's stock exchange, had a strong start to the year as low oil prices and a controlled depreciation of the local currency boosted gains across the market. It reached its peak on 4 February, when it closed at 10,045.93 points, the highest since June 2008. A buoyant mood permeated transactions during the countdown to the economic conference in Sharm El-Sheikh in March. However, the euphoria faded in April with news that Egypt had joined the war in Yemen. The trend became steeper with the ratification of the capital gains tax on stock market transactions, a move believed to have raised the cost of investments in the market. The currency shortage resurfaced in May and news about difficulties facing investors in getting foreign currency out of the country deterred them from doing so, leading to speculation in May that Morgan Stanley, the world's leading index provider, was considering excluding the Egyptian stock market from its emerging market index, the Morgan Stanley Capital International Index. This came after Telecom Egypt was taken off the index, leaving only three Egyptian stocks. Analysts said this was the minimum required for a country to stay in the benchmark index. The two-year freeze on the capital gains tax failed to take the market out of its persistent downward trend, which had started in June, due to foreign currency worries. Then came August, the worst month of 2015, stock-wise. The index lost 11 per cent of its value amid the emerging markets crisis that left it one of the most overvalued markets among its peers. Down more than 20 per cent from its peak, Egypt's bourse now fits the official definition of a bear market. Throughout the year, with rare exceptions, the trading volumes were thin and the forex controls that were implemented earlier in the year, together with the controversial issue of the capital gains taxes, did little to attract fresh funds. Another worrying element was the fact that the Commercial International Bank (CIB), still accounted for 20 per cent of the daily traded value of the market's main index EGX30, and that the top 10 actively traded stocks represented 72 per cent of the index's traded volume, which means that transactions on the rest of the listed companies was nil. According to Sigma, new offerings in the market, like EDITA, Emaar Misr and Orascom Construction Limited, all taking place during the first half of 2015 after four years of IPO silence, did little to broaden the breadth of the market. CIB continued to monopolise the lion's share of the EGX30's market cap. Trading volumes dropped year on year with daily volumes hovering between LE500 million and LE600 million during most of the trading sessions. The year was eventful for traded shares. While 2014 ended with news that Kellogg had bought the majority of local confectionary Bisco Misr, after a price war with Abraaj Capital, the food industries sector remained in the spotlight with Edita Food Industries' IPO comprising 30 per cent of the company, which was oversubscribed by more than four times. The shares registered an 83 per cent increase after its debut in April until early December when investors found the food industries sector attractive. The producer of local brands Molto, Todo and Bake Rolz also had ownership of the international brands Twinkies, HoHos and Tiger Tail. The fourth quarter saw Qalaa Holdings divest itself of two of its subsidiaries, Rashidi Al-Mizan and Al-Masriyeen as part of its plan to focus on certain fields. Juhayna also made headlines, but for a different reason. The bourse decided in August to freeze the shares in Juhayna, owned by Safwan Thabet, because of his alleged links to the banned Muslim Brotherhood. This came after a committee responsible for managing Muslim Brotherhood assets decided to confiscate Thabet's assets on the grounds of his alleged links with the group, which was banned by the government in September 2013.The move badly affected the market during August. Another blue chip company that had a hard time due to confrontation with the state was Oriental Weavers. The Egyptian Competition Authority (ECA) referred Oriental Weavers, an international producer of machine-woven carpets, to the general prosecutor following accusations that it had made agreements with distributors not to distribute products made by any company that it competes with. The company denied the charges, explaining that it revised its contracts with its distributors in January 2012 to remove exclusivity clauses. But the ECA pressed on with the charges saying, that Oriental Weavers was liable for past violations. Emaar Misr, a unit of Dubai's Emaar Properties, made the other big large-cap IPO of 2015. EM sold about 13 per cent of its shares in an initial public offering in June, at LE3.8 per share. However, the shares kept losing ground during the year and settled at 29 per cent lower in the first week of December. The market's bellwether Commercial International Bank had a good year. The bank, which has the largest asset base among private banks in Egypt, bought Citigroup's retail business in Egypt. The purchase includes about $140 million of the US bank's Egypt assets, $190 million worth of deposits and nearly 100,000 accounts. According to Reuters, the deal will add 80,000 credit card holders to CIB's existing 240,000, and will expand the bank's consumer-lending business by 10 per cent. One of the most active traded shares in the market during the year was real estate developer Amer Group. The group also made headlines with its decision to split into two companies in an attempt to create more opportunities for its development business and boost trading in its shares. The company, which owns many resorts under the name Porto, together with a series of restaurants including Chili's, Johnny Carino's and Studio Misr, was divided into a development business called Amer Holding Group and a smaller company called Porto Holding.
