FEAS Yearbook FEAS Yearbook 2012 | Page 58

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2012 EGYPTIAN EXCHANGE have taken place to modify the trading system in NILEX to match that of the main market in order to achieve higher liquidity. Moreover, special techniques have been put forth to calculate the closing price and ensure the safety of the transactions. Worth mentioning, the modified trading system helped in securing NILEX from the decline in liquidity witnessed in the main market. The rules stated that the file of the Nominated Sponsors should be transferred from EFSA to EGX management to guarantee activating their role. Despite the internal crisis, NILEX succeeded in increasing the number of companies listed in the market, by almost one third, to reach 20 companies. In line with the Egyptian Exchange belief in the importance of helping companies to raise their capital during the critical phase, EGX formed a team to attract new companies to list in the exchange. In addition, The Egyptian Exchange (EGX) and The General Authority for Investment (GAFI) signed a Memorandum of Understanding for mutual cooperation aiming to attract new SMEs to list on NILEX. Worth mentioning, GAFI has an ample database for potential companies which will help EGX in attracting more companies to list in NILEX. On the international front, EGX management has undertaken several promotional campaigns abroad post the revolution to restore confidence in the Egyptian market. The promotional campaigns aimed at the Gulf region, Europe and the United states, with dozens of interested foreign institutions participating. Worth mentioning, the promotional campaigns largely contributed to improving the image of the Egyptian Economy. Moreover, EGX invited a number of public figures and representatives of various institutions for the opening of trading sessions, to draw the attention of the society to the Egyptian Exchange and its importance for the economic well being. PAGE 56 Launching New Indices as well as including Egypt in Regional Indices Meanwhile, to enhance access to information, EGX launched a new index, EGX 20 Capped index, designed to capture the performance of the most active 20 companies in terms of market capitalization and liquidity, capping the weight of any constituent to a maximum of 10%. Egypt also joined the Dow Jones FEAS Titans 50 Equal Weighted Index designed to serve as the basis for financial products such as funds and structured products. Continuous Educational Awareness Efforts In light of the critical situation which calls for unity and concerted efforts to help the capital market overcome the crisis, EGX has launched several national campaigns to attract more investments and promoted the funds investment’s awareness campaign. Moreover, EGX visited many universities nationwide in an attempt to help students better understand stock exchange investment basics and launched a new stock market simulation targeting secondary school students and visiting nearly 90 schools nationwide. Consequently, the market conditions the number of coded investors in the Egyptian market increased by around 36 thousand new investor vs. around 35 thousand new investor in 2010. Market Looks Forward to Passing the Transition Period During the first round of the parliamentary elections the market witnessed a strong rise in the indices performance. EGX 30 index soared by 11%, EGX 70 and EGX 100 increased by 19% and 15%, respectively, with relatively high trading volumes during that period. This indicates that investors are yearning for political stability to return to the market, which reflects the strength of the listed companies. Moreover, the volume traded recorded 18.5 billion securities in 2011 compared to 33 billion securities in 2010. Likewise, the number of transactions recorded 5.6 million transactions versus 10 million in 2010. The market capitalization concluded the year at LE 294 billion as opposed to LE 488 billion at the end of 2010, with a decline of 40% and representing 21% of GDP. Moreover, the bond market witnessed a huge drop in trading activity during 2011 as opposed to the previous year, due to the political climate, in addition to the downgrading of Egypt’s government bonds four times during the year to reach B2. The value of bonds traded reached LE 31 billion in comparison to LE 63 billion the previous year. Likewise, the volume of bonds traded fell recording 35 million bonds, versus 66 million bonds in 2010. Treasury Bonds issued through the Primary Dealers System still account for the lion’s share of the total bond activity, making up 99% of the total bonds value and 86% of the bonds’ total volume traded during the year. Similarly, corporate bonds witnessed a decline in their trading activity in 2011, with their value traded registering LE 227 million, down from LE 562 million last year. Meanwhile, their volume traded reached 1.7 million bonds versus 5.5 million bonds for the previous year.