FEAS Yearbook FEAS Yearbook 2012 | Page 55

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2012 EGYPTIAN EXCHANGE We sturdily believe that the Revolution of January 25th offers a unique and historic opportunity to dramatically improve the way Egypt is governed. Dr. Mohamed Omran Chairman As we all know, in 2011, a series of events all over the globe has rocked investors’ confidence over the year starting with the Arab spring, then the tsunami in Japan and culminating with the seismic events surrounding the euro zone debt crisis since the summer. A year ago, Egypt the most populous country in the Arab world has erupted in mass protests in January 25th 2011 against the rule of Hosni Mubarak. Following eighteen days of popular protests, President Mubarak stepped down on February 11, 2011. The Supreme Council of the Armed Forces (SCAF) assumed the president’s responsibilities and vowed to oversee a peaceful transition process leading to free and fair presidential elections. Accordingly, SCAF quickly suspended unpopular provisions of the constitution and Egypt held its first free and fair voting on March 19 approving nine constitutional amendments to pave the way for the parliamentary and presidential elections. Nevertheless, as Egyptians stood at Tahrir Square and rejoiced at their new-found freedom, the lack of security and concern over the course of political events proved to be economically costly. With Egypt’s stock market closed for nearly eight weeks, investors were worried that the full effect of the protests that ousted the President will be even larger than anticipated. However, the stock exchange reopened and proved to be resilient to the EXCHANGE BACKGROUND The Egyptian Exchange (EGX) dates back to more than 125 years. Alexandria Stock Exchange was officially established in 1883, followed by Cairo in 1903. The two exchanges were very active as one the oldest Futures Market for Cotton in the world back in the 1940’s and the Egyptian Exchange was ranked as the fifth in the world. Nevertheless, the socialist policies adopted in the mid 1950 have led to a drastic reduction in activity on the stock exchange, which remained dormant during 1961 till 1992. In an attempt to re-activate the market, the government opted for the public offering of the state owned enterprises through the privatization program, which provided the impetus for its revival. In 1997, The Egyptian Exchange (formerly known as Cairo & Alexandria Stock Exchange) started its modernization program in terms of legislation and infrastructure to keep abreast with globalization and internationalization. political turmoil with a noted demand from investors especially Egyptians answering the appeals to help save the exchange and, by extension, the Egyptian economy. After the downturn post the 25th Revolution, the Egyptian Exchange commenced a promotional campaign with the aim of rebuilding the investors’ confidence in the Egyptian Economy and its Capital Market. The EGX’s delegation conducted comprehensive meetings with various financial institutions such as NASDAQ OMX and Goldman Sachs Inc. in New York and with London Stock Exchange in London. The campaign also addressed the institutional investors in the Gulf countries where they showed their extensive support and confidence in the Egyptian Capital Market and pointed out the prospects rising from the Egyptian Economy as one of the promising emerging markets. And following the democratic transition process in Egypt, On October 18th the Egyptians have casted their vote in the wake of their foremost parliamentary elections resulting in the Muslim Brotherhood’s Freedom and Justice party (FJP) and the Nour Party (Egypt’s largest Salafi political party) winning the majority in the country’s first democratic parliamentary election. Following the elections, the Egyptian Exchange hosted a press conference with representatives of the Islamists parties and Liberal and moderate parties to confirm their support of fair and open exchange policies. We sturdily believe that the Revolution of January 25th offers a unique and historic opportunity to dramatically improve the way Egypt is governed. The resulting shift in the political paradigm could pave the way for a new development strategy that combines faster economic growth and achieves better equality in income distribution which in turn have a positive impact on the performance of the Egyptian Capital Market. We do realize that the challenges ahead of Egypt are not trivial, starting with a political transformation that is still unfolding. However, the will to make a peaceful transition to a modern state where people enjoy dignity, liberty and justice is not dying away. On the contrary, progress is being made every day, thanks to the spirit of patience, persistence and believes of the Egyptian citizens that the country is awaiting a brighter future. Stocks, bonds and funds are traded on EGX. In addition to a number of structured products, issued by several international financial institutions, on the Exchange in-house designed index, EGX 30 Index, are listed and traded on various European Exchanges such as EGX 30 Certificates Issuance by The Royal Bank of Scotland (RBS), EGX 30 EUR X-Pert Certificates Issuance by Deutsche Bank, and EGX 30 Open End Certificates Issuance by Goldman Sachs International. in collaboration with the Egyptian Institute of Directors and Standard &Poor’s. The Exchange continued its journey of expanding its services and products by launching NILEX the first market for growing SMEs in the MENA region. NILEX provides medium and small fast growing businesses, including family-owned businesses, from any country and any industry sector, a clear access to capital and the benefits of being traded. EGX has developed a number of indices which help the investors track the market’s performance. EGX 20 Capped, EGX 30, EGX70, EGX100, Dow Jones EGX Egypt Titans 20 INDEX, and S&P/EGX ESG Index which is the first corporate governance and social responsibility index in the MENA region No taxes are levied on dividends, capital gain and interest on bonds for individuals, mutual funds and international funds. The Egyptian Exchange is governed and regulated by the Egyptian Financial Supervisory Authority (EFSA) that is a single regulatory body governing all non banking financial services. EGX do not impose any restrictions on foreign investment or profit repatriation in the Egyptian securities market. EGX FUTURE OUTLOOK EGX will continue exerting efforts to enhance the efficiency of the market, raise investors’ awareness, promote the financial literacy, and improve the communication between EGX and its stakeholders to further strengthening their trust in the market. Moreover, EGX will continue its aggressive marketing plan to attract the big companies to be listed in the market. 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