EXCLUSIVE- The IPO guessing game just got a bit narrower. We sat down with EGX Chairman Islam Azzam talk over the EGX30’s historic 40% rally last year, why now is the time to launch derivatives and short selling, what’s changing on the technology front — and, most importantly, the question on everyone’s mind: which private-sector companies are heading for an IPO.

We already know eight private companies are in active discussions to list, but Azzam offered enough clues to significantly narrow the field. With premium grocer and food manufacturer Gourmet on deck to start trading as early as next month, the chairman also outlined clear profiles for the remaining candidates, giving the market its strongest signals yet on who could be next.

Is it CapitalMed? In healthcare, it’s not a diagnostics center or lab chain looking to tap the market, but a medical establishment, Azzam said. This makes us think of CapitalMed given there’s been news circulating in local media since last year about the medical hub looking to list on the bourse.

What we know about CapitalMed: CapitalMed is a large-scale integrated medical city developed by Egyptians for Healthcare Services (EHCS) and located in Badr City. The project brings together multiple hospitals, specialized medical centers, medical education, research, and supporting services. EHCS is a privately-owned joint-stock healthcare developer, led by our friend Dr. Hassan El Kalla as its chairman and managing director. CIRA holds a 28% stake in CapitalMed.

In tourism, look for landlords, with Azzam saying that interest isn’t coming from hotel operators, but rather from a property owner. Azzam wouldn’t go into more detail, but that made us think of Travco and Pickalbatros, among others.

The big picture

Don’t thank catch-up after devaluation or inflation for the EGX’s record run — thank the earnings. That’s the message from Azzam, who insists the rally was rooted in corporate profitability. In fact, despite the surge, equities remain undervalued relative to peers and their own history, the exchange boss told us, pointing to robust corporate profitability as the real engine of growth. “The market is currently trading at a price-to-earnings (P/E) ratio of 7x, well below its 10-year average of 8.6x,” Azzam noted, adding that Egypt currently holds the lowest valuation multiple among regional peers.

SOUND SMART- Think of the P/E ratio as the price tag for every EGP 1 of income a company makes. Calculated by dividing the current share price by earnings per share (EPS), the metric is a quick way to gauge if a stock is cheap or expensive relative to its actual performance. A low P/E — like the 7x figure Azzam cited — typically suggests a stock is undervalued, signaling a potential bargain where the market hasn’t yet priced in the company’s full earning power. Conversely, a high P/E usually means investors expect massive future growth and are willing to pay a premium now to get in on the action, though it carries the risk that the stock is simply overpriced if that growth doesn’t materialize.

It comes down to efficiency: The top 100 listed companies (EGX100) are delivering an average return on equity of 30% — outpacing both inflation and interest rates, said Azzam. “The price is supposed to increase more,” he added, suggesting that the market has yet to fully price in corporate performance.

New toys landing on the EGX

Why should you care about the launch of derivatives + short selling? The answer is liquidity. Azzam expects the introduction of derivatives to deepen the market significantly. “In some markets, liquidity for index derivatives is typically 6x that of the spot market,” Azzam explained. These tools will allow asset managers to hedge systematic risk or speculate on market direction, adding layers of depth to the exchange. The exchange is gearing up to launch index futures and short selling, with Azzam targeting a rollout in the next two months.

Don’t fear the shorts: Addressing concerns that short selling could be used to hammer specific sectors like banking, the chairman was dismissive. He likened the mechanism to margin trading — a neutral tool that aids price discovery rather than distorts it. “Liquidity will increase with short selling,” he said, arguing that short sellers provide a floor during downturns by buying back shares to close positions.

New tech products

If you’ve been frustrated by the EGX website freezing, relief is on the way. A complete overhaul is expected within three months, alongside a new EGX Gate mobile app for quotes. And to prep the market for more complex instruments, the exchange is launching Stock Rider, a simulation tool that will allow investors to test-drive futures and short selling before committing real capital.

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