Egypt stock market aims for two more listings, short-selling before year-end

Egypt's stock exchange aims to attract a further two stock listings and introduce short-selling before the end of the year, its executive chairman said, as it looks to continue its run as one of 2019's best performing emerging stock markets.

Egypt has been the beneficiary of a huge wave of foreign investment since the government embarked on a series of reforms in 2016 linked to a $12 billion IMF loan, including weaning the economy off subsidies, introducing value-added tax and a sharp depreciation in the currency.

Egypt's stock market has risen more than 15 percent year to date, compared with a 0.8 percent slump in the MSCI Emerging Markets Index.

“You wouldn't find many countries that have such a complete story as Egypt in terms of the macro-economic reforms that took place,” Mohamed Farid Saleh told Reuters. “The reform story has been important for foreign investors.”

Foreigners, who account for around 35 percent of trading on the exchange, have been net purchasers of nearly 50 billion Egyptian pounds ($3 billion) of securities since the reforms began in 2016, compared with less than 10 billion Egyptian pounds in the three years before the reforms, he said.

They have also snapped up 31 billion Egyptian pounds of local bonds listed on the exchange, compared with one billion before 2016.

The exchange was in talks with two companies, a garments firm and a technology business, expected to list before the end of the year. A third company within the financial sector, owned by the state, was likely to be listed at some point, but the timing would be determined by a political decision, he said.

He acknowledged that there had been some delays in the IPO process, adding “it's a lengthy process and is taking more time than expected”.

The state has been seeking to list some of the swathe of companies it owns as part of an effort to clear room in the economy for private sector growth.

But the exchange was also been more active in encouraging private sector firms to list, Saleh said.

“One of the main requests of asset managers and fund managers is to find sizeable companies and this is why we've changed our modus operandi, so rather than being demand-driven we are trying to convince companies of the merits of listing,” he said.

Short-selling, allowing securities to be sold before they are acquired and aimed at increasing market liquidity, would be introduced before the end of the year, he said.

“We should be seeing it very soon. Thirty companies will be included, including ETFs,” he said.