CAIRO: Egypt-based investment bank Beltone Financial said Monday it will launch the country’s first exchange-traded fund (ETF) in December tracking the benchmark CASE 30 index.
The fund – named XT-Misr – is an open-ended fund investing in a basket of securities that mirror performance of the CASE 30 Index, the bank said in a statement.
“XT-MISR is the first of its kind for the Arab region. It is a simple, easy no frills means of spreading exposure in a diverse portfolio, said Aladdin Saba, chairman of Beltone Financial. “XT-MISR is an excellent vehicle for institutions and individuals to take advantage of investment opportunities that exist today. For people without great knowledge of investing in the market, XT-MISR offers the benefits of building up a quality investment in Egypt s top companies.
Shares in the fund can be bought at par value and treated as company shares. “If you buy shares in the fund, it’s as if you bought shares in the CASE 30 constituents, Ossama Rashad, press officer at Beltone Financial, told Daily News Egypt.
“It is a great investment tool for investors because it offers opportunity to buy a diversified portfolio of stocks in telecom, banking, construction, and so on rather than buying in one sector or one company.
The fund will initially seek LE 100 million and hopes to spark interest from foreign institutional investors, Beltone portfolio manager Alyaa Gomaa told Reuters.
It is regarded as a very good investment tool for foreign investors to access the market, she said, adding that the ETF would make the index more efficient.
“XT-MISR should increase the volume of trading in the Egyptian Exchange and bring new investors to the market from Egypt and abroad, said Maged Shawky, chairman of the Egyptian Stock Exchange, in a press statement. Sources at the stock exchange said the launch of such products could at least double the current daily trading volume of $150 million-$180 million over the next two years.
“Exchange Traded Funds have been successful in other regions for many years, particularly as they offer institutions and individuals the opportunity to invest in a market rather than one company s shares, Shawky added.
“That appeals to investors who want to take advantage of a market, such as Egypt, where the fundamentals are sound and the prospects for long-term growth are very good.
Shawky told Reuters in February the bourse plans to launch an ETF for blue-chip equities in 2008 and stock and index futures and options in 2009 to boost the daily trading volume.
He said that the exchange was putting in place a new trading platform built by Nordic bourse OMX AB in order to increase trading capacity and offer derivative financial products by the middle of 2009.
The CASE 30 index has risen five-fold since an economic reform drive in July 2004, but has lost more than 40 percent of its value since peaking in April this year amid the global financial market turmoil. That pales in comparison to the 51.29 percent gain in 2007; 10.26 percent rise in 2006, and the whopping 146.29 percent rise in 2005.
“The fund is also easy to track because it moves up and down with the CASE 30 index, Rashad added. “That way, investors do not have to monitor each share on its own and do not need to follow up with a stock broker to inform them when to sell and when to buy.
Price of XT-MISR fund can be viewed and traded anytime during the trading hours of the Egyptian Exchange. Investors can sell short, buy on margin, and invest any amount of money they want.
The fund is also provides enough liquidity needed by investors. “The fund is a market maker, ensuring there is enough liquidity for investors to buy or sell shares at any time, Rashad pointed out.
If successful, the bank said it would look at a dual listing on a European exchange within six months and creating additional ETFs tracking regional exchanges and Islamic investments.
Beltone Financial is the fastest-growing investment bank in the Middle East, with assets under management exceeding LE 27 billion. Beltone Financial s head office is in Cairo and has offices in Qatar, the UAE, Saudi Arabia, London and New York.