The Egyptian Stock Exchange is considering launching a new index that combines sustainability and Islamic Sharia, while working to increase the capital of companies listed on the main market that are less than 100 million pounds within a year, to enhance liquidity and attract new investor segments, according to Chairman of the Board of Directors Ahmed Al-Sheikh to Asharq.
Last June, the Egyptian Stock Exchange launched a Sharia-compliant index that includes 33 companies whose activities, financial and accounting conditions are in line with Islamic Sharia provisions, led by Talaat Moustafa Group Holding, Egypt’s largest private real estate developer, which accounts for 15% of the new index’s weight.
The main market of the Egyptian Stock Exchange includes about 40 companies with capital of less than 100 million pounds, including Domty, Misr Free Markets, Arab Pharmaceuticals, Alexandria Pharmaceuticals, and Arab Aluminum.
The Chairman of the Egyptian Stock Exchange said that we are working on developing sectoral indices and promoting their use and tracking among portfolio management companies and investment funds.
Expected amendments to the registration and deletion rules
The Sheikh revealed a study to amend the rules for listing and delisting companies from the market, and said: The proposed amendments ensure that the calculation of the free trading percentage is linked to a percentage of the market capital of the total market, and not a fixed percentage as is currently practiced.
The rules for listing shares of Egyptian companies on the stock exchange stipulate that the percentage of freely traded shares should not be less than 10% of the company’s total shares, or 1/8 per thousand of the freely traded market capital on the stock exchange, with no less than 5% of the company’s shares, or shares whose value is equivalent to half a percent of the freely traded market capital on the stock exchange.
The Sheikh’s statements indicate that the new amendments may provide greater flexibility that allows large companies to continue in the market with free trading percentages of less than 10% of the company’s total shares, as the head of the stock exchange attributed this step by saying that there are many companies whose market value is 1%, and at the same time it exceeds dozens of companies with low market values.
Domty Food Industries, one of the largest food companies listed on the Egyptian Exchange, is facing the possibility of being delisted from the Egyptian Stock Exchange, as a Danish company has submitted an optional purchase offer stating its desire to delist the company from the market if the deal is completed. This is also facing Sierra Education, at a time when speculation is increasing about the desire of some major companies to delist.
Increase the capital of small companies wishing to be listed
The Sheikh revealed that he is working with the Financial Regulatory Authority to raise the legally required capital for listing companies in the small and medium enterprises market to a minimum of EGP 25 million, instead of the current one million pounds.
Egypt requires that companies registered in the small and medium enterprises market must have a capital of no less than one million pounds and no more than 100 million as a maximum.
