Egypt's stock exchange has introduced on Sunday short-selling, as part of efforts to help attract more fresh investment and boost market liquidity. By allowing the short selling mechanism — the sale of a borrowed security in the hope of buying it back at a lower price — the Egyptian stock exchange (EGX) should generate more trading and thus attracting more liquidity. Egypt has witnessed a huge wave of foreign investment since the government embarked on a series of bold reforms in late 2016 tied to a three-year $12 billion IMF loan. The reforms included weaning the economy off subsidies, introducing value-added tax (VAT), and a sharp depreciation in the currency. "You wouldn't find many countries that have such a complete story as Egypt in terms of the macro-economic reforms that took place," EGX chairman Mohamed Farid Saleh told Reuters earlier in September. "The reform story has been important for foreign investors." Foreigners account for around 35 percent of trading on the Egyptian exchange, with net purchasers of nearly 50 billion Egyptian pounds ($3 billion) of securities since the reforms began in 2016, Farid further told Reuters. They have also snapped up 31 billion pounds of local bonds listed on the exchange, compared with one billion before 2016. Earlier this month, fifty-one brokerages were granted a licence to offer short-selling on the Cairo bourse, a day after the Financial Regulatory Authority (FRA) said it had decided to start allowing short-selling on December 1.
