CAIRO: Responding to local investors' long-running push to introduce a broader index to the Egyptian Stock Exchange, officials this week launched the EGX 70 to complement the traditional benchmark EGX 30, formerly known as the CASE 30. Many market players, mostly local retailers and institutions, had long been calling for an index that displayed the performance of companies with smaller capitalizations than those listed on the EGX 30. "There has been a lot of preparation for this, said Mohamed Radwan, a broker with Pharos Securities. "A lot of clients were frustrated by the fact that the CASE 30 was the main indicator. The new index includes the 70 most actively traded companies - excluding those on the EGX 30 - irrespective of size or market capitalization. The value of the index is calculated using the shift in the closing prices of the listed stocks. The index's constituents are strewn across a variety of industries. Suez Cement, Eastern Tobacco, Pyramisa Hotels, Nile Matches and Cairo Poultry are all listed, for instance. Included stocks will be reviewed twice per year and removed if they have not been traded in large enough volumes or frequently enough. The introduction of the price index came as part of an ongoing attempt to modernize and upgrade the exchange's facilities and services, officials there said. The new exchange should be useful to all investors in the market, they said, as the 70 newly listed companies in conjunction with the 30 in the old benchmark will comprise the vast majority of trading. But the EGX 70 is not likely to affect business at brokerages that deal with larger investors, who tend to trade in higher-capital companies, Radwan said. Much of the exchange's activity is concentrated in the top; the most active 10 constitute about 60 percent of the total volume and value traded. "Mainly local funds that are specialized in small and medium caps will likely use the new index, he said. As well as announcing that they would rename the CASE 30, exchange officials said they would begin to denominate the benchmark index in dollars in order to help foreign investors and others compare it with other exchanges' performances or with other investment instruments. This, Radwan said, is likely in response to analysts' predictions that the Egyptian pound will continue to depreciate through the year. It is too soon to tell whether this is a good move or not, he said. "We should see what's going to happen first, see some history first, then we decide, he said. After hitting a lifetime high in May last year, the Egyptian Exchange's main benchmark index has slid to less than a third of its peak value, struck hard as foreign investors retreated following the deepening of the financial crisis. The new EGX 70 closed at 439.27 points yesterday, down from 445.5 on Sunday.
