Egypt's Court of Cassation upholds death penalty to 3 Muslim Brotherhood leaders    Sudan to complain to Security Council of Ethiopian unilateral measures on GERD    Terror charges laid against accused in Canada Muslim attack    Egypt's Planning Minister reviews parliamentary report on economic, social development draft plan    17th Egyptian-Saudi Joint Committee agrees to develop trade cooperation    Preview: France and Germany in rare early meeting at Euro 2020    Endeavour Mining announces admission to London bourse listing    APO Group, Getty Images make African press releases, images available globally    Luxor's comprehensive health insurance scheme gearing for 1 July launch    Pakistan military: Bomb kills 4 soldiers guarding coal mine    Egypt's parliament approves the country's new 2021/22 budget and socio-economic development plan    7th International Day of Yoga to be celebrated in Cairo    Swiss director Julia Bünter's Fiancées will open 22nd Ismailia Int'l Film Festival    Egypt's stocks finished in mixed notes as benchmark EGX 30 adds 0.47%    Egypt's Qalaa Holdings chairman banned from flying – Reuters    America is back? Experts warn multiple issues threaten to divide NATO    Group-IB uncovers ongoing large-scale scam targeting Middle East, Africa    Italian film 'Mi chiamo Francesco Totti' wins BankGiro Loterij Audience Award at IFFR    24th Shanghai Film Festival marks Communist Party of China centenary    Macron wants to 'move forward' with Turkey ties    With surge in virus, Oman faces shortage of hospital beds: AP report    Global financial institutions commit $80 bln to support Africa's sustainable recovery    Safwa Holding launches S-One in New Capital with EGP 750m in investments    Shoukry heads to Doha for talks on GERD issue    Cairo Court announces 3 decisions in Zamalek apartment case    Egypt development projects in South Sudan serve as role model in Africa: Irrigation minister    Novavax: Large study finds COVID-19 shot about 90% effective    A potential Ahly CAF Champions League final game causes dilemma for Olympic team    Some US allies near Russia are wary of Biden-Putin summit: AP report    The Nile for Peace Initiative calls for reaching a legally-binding agreement over GERD issue    Shoukry accuses Ethiopia of obstructing efforts to reach GERD agreement    Egypt, UNFPA to discuss further support to achieve 2030 agenda    Palestinian-Jordanian The Synaptik and Egyptian Felukah rappers team up in 'Nefsi' single    APO Group enters new exclusive agreement with Getty Images on African press releases and images    Iconic Iraqi poet Saadi Youssef dies at 87 in London    Chile's Sanchez out of Copa America group stage with injury    Defending champions Brazil hosts Copa America    Saudi Arabia limits 2021 Hajj pilgrimage to citizens, residents    France's Benzema eyes national team return    Egypt is on short list of partner countries for U.S. COVID-19 vaccines: embassy    Russia to resume charter flights to Egypt resorts in the coming days    Biden administration to send surplus U.S. COVID-19 vaccines to Egypt, several countries    Russia expects to resume charter flights to Egypt resorts in near future    Egypt's Sisi announces allocation of $500 million for reconstruction in war-wrecked Gaza    On International Museum Day, Egypt opens two new museums at Cairo Airport    Egypt's Ahly is establishing a new stadium, expected to be 'sports complex'    Old Cairo's Al-Fustat will be revamped on Egyptian President's directives    Veteran Egyptian journalist Makram Mohamed Ahmed passes away at 86    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

From revival to bounce
Published in Al-Ahram Weekly on 18 - 05 - 2006

After years of stagnation, the Egyptian capital market has finally won international recognition. Sherine Abdel-Razek reports
The Egyptian capital market's bullish performance over the past three years has succeeded in competing with the government's ambitious economic reform in making the headlines. The culture of investing in the stock market and following up on it performance has once again been revived. This is a notable development given the fact that the Egyptian bourse had been closed for 40 years following the nationalisation policies implemented in the 1960s. What was once the world's fourth largest stock exchange had remained virtually dormant, until economic reform policies revived it in the early 1990s.
Perhaps the strongest manifestation of the Egyptian stock market's new-found vitality is that some one million individual investors known as retailers, tapped the market for the first time in 2005. This was the result of an unprecedented growth in company revenues which sometimes reached the three digit threshold.
The Cairo and Alexandria Stock Exchanges now dominate the top ranks of fast-growing emerging market categories, and are constantly monitored by major financial powerhouses like Morgan Stanley and Standard & Poors. The Egyptian stock market showed its strongest performance last year when it recorded a growth of 150 per cent. It outpaced most of its peers in other emerging markets, ranking as the best- performing stock market worldwide for the second consecutive year, according to a Financial Times assessment.
Market capitalisation shot up from LE175.97 million in January 2004 to LE532 billion in January 2006. While this surge has retreated over the past three months in a correction movement, the LE455 billion threshold attained by the market last week is still 200 per cent higher than that of three years ago. Stringent new listing rules have also reduced the number of companies listed, simultaneous with a significant improvement in the quality and performance of companies. The value of transactions rose from a threshold of LE100-200 million daily in the past three years, to over LE500 million and, at times, LE1- 2 billion. This part was given momentum after a same-day trading technique was adopted at the end of last year.
CASE has subsequently started to gain international recognition which is reflected in a heightened interest by foreign investors. Foreign transactions now stand at an approximate 30-35 per cent of market turnover every month. The Egyptian stock market has been included in international portfolios, in collaboration with global financial institutions like DOW Jones, ABN AMRO and Deutche Bank.
The DOW Jones CASE Titans 20 index was also launched four weeks ago to track the performance of the market's 20 best-faring companies. This is according to criteria set by Dow Jones, the world's largest index provider. Companies' performance is judged according to price, financial performance and growth rates. Foreign individual investors interested in buying in CASE's 30 most active stocks can do so at a minimal investment, by putting their money into open-ended investment certificates. These are currently traded for as low as $10 per certificate. The open-ended certificates were launched by ABN Amro in November of 2005 and Deutche Bank last March. They are currently traded on the Frankfurt and Stuttgart stock exchanges.
The growing international acknowledgement of the Egyptian stock market has been the result of strong economic fundamentals that have supported its performance. A package of far- reaching reforms implemented by the government over the past three years has also further consolidated the stock exchange. This has included a better monetary system based on a free exchange rate, coupled with the other reforms adopted with the accession of the cabinet of Prime Minister Ahmed Nazif in the middle of 2004.
The cabinet which includes several technocrats and businessmen supporting economic liberalisation has introduced broad reforms in the customs tariffs and income tax regimes. Substantial reductions were undertaken in both, which resulted in an improvement in the performance of companies and an increase in listed securities' revenues. The acceleration of the long-standing but sluggish privatisation programme has also provided the market with stocks from appealing sectors such as oil and telecommunications. This has strengthened the market even more by diversifying its traded sectors. A banking overhaul has also consolidated the position of Egypt's financial institutions and attracted a substantial foreign interest in the market in the past two years. Société Générale Bank of France has expanded its presence in the Egyptian market by further raising its stake in NSGB. Other prominent newcomers to the banking sector are the Greek Piraeus, and Calyon Bank of France.
The Qualified Industrial Zones (QIZ) agreement between Egypt, Israel and the US has energised the textile sector, with companies like Arab Ginning making it into the top-traded list for the first time.
Last summer's appointment of the reform- minded Maged Sahwqi and Hani Sarieddin as CASE and Capital Market Authority heads respectively is seen by many as having given a significant asset in the stock market's administration. Both men have set their efforts to re-shaping the bourse to become one the region's most prominent stock exchanges. This is currently realised through further structural changes, regulatory reforms and liberalisation. All of these developments have contributed to softening the impact of the market's current reversal that started early last February. Observers seem placid about the current downward trend, regarding it as a correction movement that is normal in the stock market cycle. They predict that the current reversal will soon end, with the market already showing signs of strong performance. Analysts say that following the overheated performance which extended from November 2005 to January 2006, the market needed a cooling-down period in which investors could cash in their profits. The stock market drop was induced by the setback that had afflicted the Arab region's bourses last March. A sizeable number of Arab investors pulled out of the Egyptian stock market in order to compensate for losses sustained in Saudi Arabian and UAE markets.
Other future developments are expected to further bolster the market and boost its resilience to shocks. These include the introduction of new instruments like derivatives and bond-backed securities. The securitisation law's executive regulations have already been issued to pave the way for such a step.
New investment techniques like short-selling and Internet trading are also expected to open up new channels for security investments.

Clic here to read the story from its source.