The Egyptian Exchange (EGX) announced last week it will launch a new index, the EGX30 Capped, as of Sunday, 3 February.
The new index will include the most active 30 stocks in terms of liquidity, the EGX said in a statement.
Market capitalisation will be set based on the weight of the free-float shares of each company within the index, the EGX added.
By introducing the EGX30 Capped, the stock market will end trading on the EGX20 Capped, the EGX noted.
The new index is scale-weighted, the EGX said, pointing out that it has set a maximum weight limit for each company within the index at 15% during the quarterly review of stocks’ weight to limit the control of a few numbers of companies on the general trend of the index.
Mohammed Farid, the chairperson of the EGX, said that the EGX30 Capped will boost the efficiency of the indices as effective instruments for measuring market performance.
The new index will also help attract investment institutions, which will boost trading and liquidity, the main factor of the strength and competitiveness of any stock market, Farid added.
He highlighted that the new index enables the possibility of introducing financial products such as index funds that investment institutions can target to issue investment tracking funds (Index Tracking).
This step comes as a completion for the EGX’s integrated development plan on all indices to meet the demands of market makers.
Meanwhile, Sarwa Capital Holding for Financial Investments and Cairo Investment and Real Estate Development have joined the EGX’s benchmark EGX30 index after being listed on the EGX for four months.
Almost eight stocks have exited from the index, while others have been included in the index, such as Orascom Development, Egyptian Chemical Industries (Kima), and Oriental Weavers Carpet, according to the EGX’s periodic review on Wednesday.
Sarwa Capital’s stock jumped by 3.62% to EGP 6.3 after announcing the periodic review, with a turnover of EGP 5.13m.
Cairo Investment’s stock remained stable at EGP 9.2, with a turnover EGP 13.7m.
Earlier this month, Beltone Research forecast that Credit Agricole-Egypt, MM Group for Industry and International Trade, Oriental Weavers Carpet, and Cairo Investment and Real Estate Development, among others, would join the benchmark index.