Federation of Euro-Asian Stock Exchanges
The Egyptian Economy was affected by the global economic status, which in turn affected EGX’s indices. However, in the second half of 2016 the Egyptian government was keen to implement the economic reform program in cooperating with the IMF, which had its positive impact on the Egyptian market’s development.
Some laws were issued to enhance the investment environment such as the New Investment Law No. 72 for the year 2017 issued on 31 May 2017, and the amendments of the Capital Market Law No. 95 for the year 1992, which is considered to be the most important incentive step for the development of the Egyptian capital market. Issuing these laws had a great impact on maximizing the private sector role in the Egyptian economy, followed by an increase in the growth rates over the medium-term.
In addition, the Egyptian government has adopted measures to encourage investment and remove obstacles facing investors, by raising the level of performance of the public sector companies, encouraging the private sectors to develop, providing the financial tools to the SMEs projects and reforming the legal & legislative frameworks.
Within the same context, the Egyptian Prime Minister, Dr. Mostafa Madbouly met EGX Chairman to discuss EGX performance as well as to review the strategy of developing the Egyptian capital market during the upcoming period. During the meeting, they also discussed the plan for launching commodities and derivatives markets.
Despite the instability of the international capital markets, on the 28th of August 2018, Moody’s Investors Service (“Moody’s”) changed the outlook of the Egyptian government’s long-term issuer ratings from stable to positive and affirmed the B3 issuer ratings. This followed raising Egypt’s rating from CAA1 to B3 with a stable outlook on 7 April 2015. This is considered the best rating since March 2013 which means that the financial institutions have increased the confidence in Egypt’s capacity to pay its debts.
Worth mentioning Fitch Ratings changed Egypt’s outlook from stable to positive, keeping Egypt’s rating at the B level on 16 of January 2018, following Fitch Rating change of Egypt rating from B- to B with a stable outlook on 19 December 2014.
Standards & Poor’s raised the rating of Egypt from B- to B with a stable outlook on 11 May 2018, following its outlook from stable to positive on 10 November 2017.
On the other hand, measures adopted by the Egyptian government since November 2016 had a great impact on EGX index compared to other developed and developing countries; despite the instability of the international capital markets witnessed in 2018.
The trading value increased with a percentage of 50.3% from November 2016 to December 2018, to reach EGP 778 billion compared to EGP 518 billion during the period from September 2014 to October 2016.
The volume traded increased with a percentage of 52.8% to reach 161 billion securities during the period from September 2014 to October 2016 compared to 106 billion securities during the period from September 2014 until October 2016.
Foreigner’s recorded remarkable net flows (stocks only) EGP 21.98 billion from November 2016 until December 2018 compared to EGP 2.04 billion from September 2014 till October 2016.
In light of the economic reform agenda embraced by the Egyptian government, EGX adopted the value chain theory in order to reach the best possible performance, and thus worked through the following:
First Section:
Enhancing the quality of disclosure and strengthening the communication between listed companies, portfolio managers and financial intermediaries. In addition to increasing the awareness of the listing benefits in order to attract new companies to be listed.
Overview of the Egyptian Economy and EGX performance at 2018
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