Why some EGX companies spent the recovery week buying their own stock

Five EGX-listed companies took some 20.1 mn of their own shares off the market last week, buying through the rebound that followed a selloff severe enough to trigger the bourse’s first market-wide trading halt since October 2021. The EGX30 closed in October down 4.4%, with the EGX70 shedding some 9.9% over the same period. Three firms approved their programs during that selloff: Ibnsina Pharma’s board on 25 October, Edita’s on 26 October, and Taaleem’s on 29 October. Pioneers Properties for Urban Development (PRE Group) and Bonyan for Development and Trade already had programs running into the fall.

Valuations were a big part of the appeal, Al Ahly Pharos Head of Research Hany Genena tells EnterpriseAM, adding that his desk fielded inquiries from companies weighing whether the selloff was a good moment to launch a buyback. EGX30 heavyweights had been caught in the crossfire of two bouts of selling pressure, one driven by external factors and the other by the EGX70 rout, leaving many trading at fair valuations or well below them, with few stocks in between. Real estate stocks were weighed down by concerns over a sector slowdown and higher interest rates, while CIB came under pressure from broader foreign outflows from Egypt. “Some of the stocks were extremely undervalued,” Genena says.

That’s why the buying continued as the market started to recover. By Wednesday, the EGX30 had gained for a second consecutive session, rising 2.83% to close at roughly 50.7k points, with foreign institutions being net buyers of EGP 338.7 mn. Here’s where each program stands:

• Bonyan for Development and Trade bought 5.2 mn shares on Thursday, the final session of its program and its largest purchase by some margin, after taking 2.62 mn on Tuesday and 2 mn on Wednesday (here, pdf, here, pdf, and here, pdf). That brings it to 32 mn shares since notifying the exchange, under a 6 October resolution authorizing up to 4% of issued capital, with its execution window closing on Thursday.
• PRE Group has taken just over 23 mn shares since its 14 October notification, under a board resolution dating to 22 August, including 420k in Thursday’s session (pdf).
• Ibnsina Pharma has bought 5.33 mn shares across five sessions since 29 October, including 630k on Thursday (pdf), though its filings disclose each session without a running total or program size.
• Edita has bought around 3.42 mn of the 30 mn shares it authorized on 26 October, under a one-month program equivalent to roughly 1.4% of its issued capital. Its largest purchase came on Monday, at 1.68 mn shares (pdf).
• Taaleem bought some 370.5k shares on Wednesday (pdf), just two days into a program that runs through 2 December. It has approval to repurchase just over 22 mn shares, or 3% of its capital, using its own funds and executing through Commercial International Brokerage (CIBC), to support and stabilize its share price (pdf). Its board approved the program unanimously after setting aside the votes of shareholder Palm Hills Development’s representatives, with no participation from major shareholders or insiders. Taaleem held no treasury shares before the program, and its notification commits to staying inside both the 3% and the 10% statutory ceiling.

Disagreeing with the screen

A buyback is what a board reaches for when it thinks the market has its price wrong. “The company’s internal valuation or perspective sees a much more valuable company than what the market is valuing it at,” Menthum co-founder and CEO Himanshu Shrimali tells EnterpriseAM. A buyback also spreads earnings over fewer shares, lifting earnings per share for those who hold on. And when several boards reach that conclusion in the same two weeks, Shrimali sees a signal for the whole market. “It’s a good signal for the market that the companies have bigger conviction in their valuation than what the market is seeing it as,” he says.

SOUND SMART- Buybacks are also the cheaper way to hand money back: dividends carry a 10% withholding tax, while selling into a buyback attracts only stamp duty, Genena told us in January. Unlike a higher dividend, they also set no expectation of a repeat payout the following year.

Conviction also counts for more in a market priced by sentiment. “Share buybacks usually are a signal of confidence from the people who know these companies best, and that matters in a sentiment-driven market,” Managing Director of Okaz Asset Management Randa Hamed tells us. She adds a condition: a buyback makes sense only when a stock is undervalued and the balance sheet can carry it.

And even when it does, the lift is temporary. “A buyback supports a price only while it runs,” Hamed says. “The real question is whether those shares are canceled or come back to the market within the regulatory window.” Canceled shares shrink the share count for good, while shares parked in the treasury are supply waiting to return.

BACKGROUND- Egyptian law caps treasury holdings at 10% of a company’s shares and requires them to be re-issued or canceled within a year.

A good number of those shares will likely make their way back onto the market, Genena expects, since companies that bought at distressed valuations could book gains by selling their treasury shares once prices recover. And with many in the market expecting 1H 2027 to be considerably stronger than 2H 2026, companies have some room to wait for a better exit before the one-year deadline.

The freefloat problem

Selling those shares back would also restore some of the float that buybacks take out of trading. Egyptian freefloats are already slim by international standards, a fraction of what a large US-listed company leaves in the market, Shrimali notes. Taking more out of circulation makes the remainder easier to move, he adds. “If the freefloat was already small, let’s say only 10 or 15%, and if they buy back, then the freefloat will become even smaller.” His worry is market depth, since a smaller float is more volatile, which is the opposite of what a company seeking a steadier share price wants.

For some companies, however, a thinner float is the point, Genena says, pointing to the cement sector. Misr Beni Suef Cement has bought back shares before and then reduced its capital, a move that also limits how much stock other major shareholders can accumulate toward a board seat. That matters in a fiercely competitive sector where companies are increasingly reluctant to give rivals visibility into their profits and margins. “It’s becoming more and more closed, more and more heading towards private than public,” Genena says.

What’s next: The past two weeks suggest the market may have found a floor, according to Genena, though he sees another round of buybacks coming if stocks face renewed selling pressure.