Economic Analysis by Dina Abdel Fattah The Egyptian Exchange (EGX) is no longer what it once was. In 2008, it ranked among the region's most active markets, with annual trading volumes of roughly EGP 530 billion (about $97 billion at the time). Daily turnover often exceeded EGP 1.5–2 billion, putting Cairo on par with major emerging markets. Political or economic decisions were immediately reflected on trading screens, and the exchange served as a bellwether of foreign investor confidence in Egypt. Fast forward to 2024, and the picture is starkly different. Annual trading barely reached EGP 1 trillion — less than $20 billion at current exchange rates — marking a dramatic erosion in real value. The ratio of turnover to GDP has collapsed from 59% in 2008 to around 5% in 2024, a decline experts describe as the market's "clinical death": an exchange in form and structure, but no longer fulfilling its financing or investment role. Structural Erosion The decline is not accidental. For years, the institutional backbone of the market has been eroding. Major companies have delisted or frozen their shares, leaving trading dominated by individual speculators. Pension and insurance funds remain largely absent. Most damaging of all, the long-discussed "market maker" mechanism has never been activated, leaving bid-ask spreads wide and liquidity shallow. By contrast, Saudi Arabia and the UAE have implemented such mechanisms effectively, boosting daily liquidity and making it easier for foreign investors to enter and exit at low cost. Global investment banks now describe Egypt as high-risk and illiquid, while Gulf markets are classified as "core" holdings for any global portfolio focused on the region. The turnover ratio — once buoyed by state intervention and institutional activity — has fallen to negligible levels. Neither government entities nor large domestic institutions play the stabilising role they once did. The Rise of Government Debt While equities withered, government debt markets flourished. Outstanding treasury bills and bonds exceeded EGP 4.2 trillion by March 2025, accounting for more than 90% of traded securities by value. Yields are extraordinary by global standards: 25–27% on short-term bills and 20–23% on longer maturities, compared with under 4% on US Treasuries and less than 5% in Saudi Arabia. Such spreads have attracted yield-hunters despite high risk, especially with the possibility of hedging currency volatility offshore. Rating agencies such as Fitch and Moody's, even as they downgraded Egypt's sovereign rating, noted that strong local bank demand for government debt remains a stabilising factor. In the eyes of many global institutions, Egypt has effectively become a bond market, not an equity market. Global Standing Indices reinforce this marginalisation. MSCI includes only three Egyptian companies in its benchmarks; FTSE Russell keeps Egypt in the secondary emerging category, with negligible weightings in global funds. Reports from JP Morgan and Morgan Stanley now classify the exchange as closer to a "frontier market" than an emerging one. Meanwhile, Saudi Arabia's market capitalisation has soared to over $3 trillion, fuelled by structural reforms and mega-listings like Aramco. The UAE has become a global financial hub through blockbuster IPOs like DEWA and ADNOC, and full openness to foreign capital. The contrast is not just in numbers, but in political vision, institutional depth, and government support. Mounting Challenges Egypt's stock market faces layered challenges. Legislatively, the absence of a market maker and patchy disclosure weaken trust. Frequent, shifting tax policies unsettle investors. Institutionally, the absence of large financial players leaves the market hostage to retail speculation. Economically, inflation above 30% and recurring currency devaluations add to the risks. Product offerings remain narrow: no futures, options, or major sectoral ETFs. Regionally, competition from Dubai and Riyadh is fierce — both offer liquidity, transparency, and strong state backing. A Narrow Window for Revival Still, analysts see a narrow path forward. Their recommendations include: * A political signal that the exchange is a national priority. * Enforcing a robust market-maker framework with incentives. * A regular pipeline of quarterly IPOs to deepen the market. * Expanding financial products, from ETFs to sukuk and REITs. * Engaging pension and insurance funds, alongside targeted programmes to attract foreign institutions. * Stabilising tax and regulatory policy for at least three years. * Upgrading settlement systems and disclosure standards. Brokerage firms, meanwhile, are urged to improve execution quality, develop quantitative trading desks, and create block-trading platforms to facilitate institutional flows. Twenty Questions for the New Leadership For the new management of the Egyptian Exchange, twenty fundamental questions remain unanswered: 1. What is the strategic roadmap to restore the exchange as a driver of the economy? 2. When will a binding market-maker system be introduced? 3. What concrete measures will raise daily liquidity and broaden participation? 4. How will coordination with the Central Bank of Egypt (CBE) and Finance Ministry ensure balance between debt and equity markets? 5. What is the timeline for government and sectoral IPOs? 6. How will major and mid-sized companies — many of which left — be encouraged to re-list? 7. Is there a strategy to attract listings from technology and new-economy firms? 8. When will advanced products such as futures, derivatives, and ETFs be launched? 9. Will a transparent national benchmark index be developed to attract global funds? 10. How will long-term investors be incentivised over short-term speculation? 11. What steps will mobilise local institutions like pension and insurance funds? 12. How will sovereign wealth funds and global asset managers be engaged? 13. What policies will reverse foreign investor outflows? 14. What programmes will raise financial literacy among retail investors? 15. How will settlement systems be modernised to accelerate trading? 16. How will fintech be integrated to improve market efficiency? 17. What measures will raise disclosure and governance to global standards? 18. How will trust be rebuilt between the exchange and brokerages? 19. How will the Egyptian Exchange compete with Dubai and Riyadh? 20. What is the plan to regain stronger representation in MSCI and FTSE indices?
