Egypt retains emerging market status as S&P Dow Jones decides against downgrade

Egypt dodges index downgrade: S&P Dow Jones Indices decided not to downgrade Egypt, confirming the country will keep its EM status, according to an EGX statement. The announcement closed out a review that started in June, when S&P proposed downgrading Egypt to Frontier Market status, a lower tier with less global investment money tracking it. EGX Chairman Omar Radwan told our Egypt desk the exchange made its case to S&P by pointing to Egypt’s improving fundamentals, including fewer delays getting foreign money in and out, record foreign currency reserves, and a record daily trading volume of EGP 15.6 bn.

Why it matters: Egypt makes up 0.12% of S&P’s Emerging Markets index. But if it had been downgraded, it would have jumped to about 3.4% of the much smaller Frontier index — nearly 29 times as large a share. That kind of jump forces index funds to buy or sell large amounts of Egyptian stocks automatically, regardless of how the companies are actually performing. Dodging the downgrade means Egypt avoids that disruption.

Speaking of FTSE: Telecom Egypt will move from small-cap to mid-cap in FTSE Russell’s Emerging Markets indices in the September semi-annual review, joining CIB and Talaat Moustafa Group as the third Egyptian company in the benchmark, according to a company statement. The upgrade follows the stock’s rally, which lifted the company’s market capitalization to around USD 3.9 bn, and will take effect on 21 September.

Abu Dhabi National Company for Building Materials (Bildco) is set to become a strategic shareholder at Al Khazna Ins. through a capital increase of up to AED 3 bn. The transaction would see Al Khazna issue new shares to Bildco, with the final stake, share count, and issue price to be set after valuation and subject to final agreements and regulatory approvals, according to ADX disclosures here (pdf) and here (pdf).

Why it matters: The transaction would bring a new strategic shareholder into Al Khazna after the CBUAE revoked its ins. license last year over continued non-compliance with licensing requirements. For Bildco, this is part of a much wider diversification push beyond construction materials. The company completed its 50% acquisition of food trader AG Group last month, after acquiring Arabian Nights Village last year, and has also moved into new investment and AI ventures while pursuing an engineering consultancy stake.

BinDawood Holding plans to invest up to SAR 1.5 bn in additional capital over the next two to three years, with the bulk earmarked for Saudi Arabia, after investing around SAR 1.8 bn in acquisitions since 2022, CEO Ahmed BinDawood told Al Arabiya Business.

REMEMBER- The retailer had a busy expansion period, completing its acquisition of a 51% stake in Vaza Food Company for SAR 217.9 mn. It also absorbed pharmacy chain Zahrat Al Rawdah, children’s toy distributor Toy Triangle, and marketing tech firm Mirror Mirror to diversify revenue away from pure-play grocery retail.

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The EGX will waive administrative service fees for the first 20 companies seeking an initial listing on its SME market that meet the required conditions and submit their listing documents by the end of 30 September, under an executive decision. The waiver covers fees for reviewing listing and securities-addition applications, plus the charge for publishing financial statements.

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