Macro Analysis /
Egypt

Egypt: Rebalancing expectations for the EGX30 in August

    Al Ahly Pharos Securities Brokerage
    11 July 2019

    New criteria for joining the EGX30

    The Egyptian Exchange reviews the constituents of its main index, the EGX30, on a semi-annual basis (1 February and 1 August) to add new constituents or remove existing ones based on a certain criteria. Those criteria have been amended and will be applied to the current rebalancing process (1 August). 

    Liquidity remains the most important factor and is now measured by ranking EGX constituents by total trading value per month, after excluding special transactions. Companies are then chosen based on the number of times they rank among the top 30, versus the previous system, where stocks were ranked based on their total six-months' turnover. 

    If two stocks have the same rank, the company with the higher six-months' turnover is chosen; in the event they have the same or similar turnover, the company with the lower standard deviation between their average value traded and monthly turnover is chosen. 

    Stocks are tested for further filters such as the minimum number of trading days, which has been modified to 65% of the six-month period (78 days), up from 50% (60 days) previously. The minimum free float stays at 15%.

    Pharos’s expectations for EGX30 additions and deletions

    Additions

    1. Orascom Construction Limited (ORAS)
    2. Cleopatra Hospital (CLHO)
    3. CI Capital Holding (CICH)
    4. Sidi Kerir Petrochemicals (SKPC)
    5. Ibnsina Pharma (ISPH)

    Deletions

    1. Ghabbour Auto (AUTO)
    2. Cairo Investment and Real Estate (CIRA)*
    3. Sarwa Capital (SRWA)
    4. Arabia Investments & Development (Istithmaraat) (AIND)
    5. Arab Cotton Ginning (ACGC)

    *If the rebalancing committee excludes Global Telecom from the rebalancing exercise, since the company is expected to de-list from the EGX on 6 August, Cairo Investment and Real Estate would still be included in the EGX30, and Global telecom would migrate instead.