The bourse has big plans for 2024:The Egyptian Stock Exchange is out with its developmentstrategy (pdf) for the current year, laying out a laundry list of changes and reforms to overhaul trading, add more companies, and increase liquidity. The EGX had an uneventful IPO market last year, with only TAQA Arabia going public, as more companies put their listing off on the back of economic headwinds. The blue-chip EGX30 index gained around 66% last year, most of the gains can be attributed to investors piling into the stock market to hedge against the devaluation of the EGP.

IPO INCENTIVES-

Fresh IPO incentives: The exchange plans to hold discussions with the Financial Regulatory Authority (FRA) and the Finance Ministry to grant tax incentives for a limited period to companies that offer at least 20% of their shares on the EGX in an IPO — with a specific focus on companies that export their products or locally manufacture products that are otherwise imported. The bourse also wants to encourage shareholders of listed companies to offer up additional shares on the market.

A better organized privatization program: The bourse plans on categorizing state-owned companies slated for an IPO into clear segments based on either their activities or target investors. The move aims to give a promotional edge to these companies when they are offered up to potential investors.

CAPITAL + INVESTMENT REQUIREMENT-

SMEs will have a limited stay at Tamayuz: The exchange wants to place a cap on SMEs' stay on the Tamayuz index and oblige them to submit a plan mapping out how they are going to raise their capital within 3-5 years to the EGP 100 mn required to be eligible to switch to the main market. In addition, SMEs will have to meet a minimum capital requirement of EGP 25 mn to be listed on Tamayuz in the first place.

Facilitating capital increases for listed companies: The bourse wants to streamline the process of increasing capital for listed companies and trim the capital subscription period to ten days.

More investment from state institutions? The bourse wants to increase the minimum investment that special funds and institutions like Egypt Post, the Endowments Ministry, the Investor Protection Fund, and Social Security and Pensions Authority are required to invest in securities. The exchange wants to tip the balance in favor of stocks, and not just fixed-income securities.

MOC ORDERS-

MOC orders coming our way? The exchange plans to introduce market-on-close (MOC) orders in a bid to catch up with global trading practices. MOC orders allow traders to have their orders executed at the closing price.

NEW MARKETS-

EGX wants to attract new investor segments: A sharia-compliant index and exchange-traded funds, a voluntary carbon market, a real estate exchange, and a derivatives market are all in the works. The strategy doesn’t give us the launch dates for any of the indices.

MORE DIGITALIZATION-

The EGX plans to double down on digital transformation as it eyes to launch e-KYC (know your customer) protocols and digital onboarding. It also wants to finalize an agreement with an international tech solutions provider that will launch the EGX’s new e-disclosure system that uses the eXtensible Business Reporting Language (XBRL).

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