Starting IPOs programme reflects successful economic reform plan: SIS

Doaa A. Moneam
4 Min Read
Traders work near the exchange bell at Egypt's Stock Exchange (EGX) in Cairo July 3, 2013. Cairo's benchmark dipped 0.3 percent, slipping off a three-week high and extending 2013 losses to 9 percent. Bourse data showed that foreign investors were sellers but Egyptians remained net buyers on hopes a military intervention would put an end to the Islamist president's rule. REUTERS/Mohamed Abd El Ghany (EGYPT - Tags: BUSINESS)

According to a recent report issued by the State Information Service (SIS) portal, the implementation of the IPOs programme reflects the successful economic reform plan that Egypt has experienced since late 2016. It is a corrective move, aiming to propel the financial market and to offer promising investment opportunities in the Egyptian market. This will increase the investment volume in Egyptian securities’ portfolios. It is also designed to entrench the EGX as one of the best emerging stock markets in the world.

At the same time, it is considered as a key factor to encourage people to invest in financial tools, and strengthen demand for dealing with the EGX as a non-banking financial instrument.

In this regard, according to the SIS, the EGX has experienced a notable improvement in its performance thanks to the economic reform procedures which enhanced– along with intensive promotional campaigns that the EGX launched–investors’ confidence in domestic shares.

In the same line, according to the ministry of finance’s data, the IPOs programme has been determined to expand the ownership base, raise additional funds for Egyptian companies, and to attract more investments, thereby optimising the state’s assets.

Noteworthy, according to Country Economy, a leading tracker of stock markets all over the world, the EGX is the fifth best stock market in the world in 2018. The EGX is the fifth best performing stock market in the world after rising 16.25% YTD in May 2018, following Venezuela’s IBC Caracas which soared 1304.26%, Ukraine’s PFTS index (the main index), as well as the GSE in Ghana and the Ukraine’s ‘UX’ Index. Meanwhile on the regional side, the EGX was the best performer among Arab stock markets, and second in Africa only to the GSE.

In this regard, the ministry of finance studied the potentials of IPOs and state-owned companies in all their forms and legal standings. As an outcome, a comprehensive and promising programme has been prepared, entailing offering public stocks in more than 20 companies. The latter are varied between first-time listed companies and ones which the government will increase their offered shares in the capital market.

President Abel Fattah Al-Sisi has lately reviewed the set programme, giving directives to embark on its launch and implementation in the upcoming period. He also mandated that all the state’s entities shall abide by the set plan and mobilise all facilities to successfully implement the programme, given its importance in increasing investments and enhancing the trading volume in the capital market.

Noteworthy, the total amount of offered stocks within the mentioned IPOs programme is expected to be worth approximately EGP 80bn, while the market value of offered companies is around EGP 430bn. Offered shares of companies range between 15%-30%, unless public shares are less in value.

The programme is set to be implemented over 24 to 30 months, in an attempt to expand the ownership base, market capital, and daily trading volume.

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