The anticipated introduction of long-awaited market instruments, including short selling and derivatives, along with forecasts that the year will see more offerings from both the public and private sectors, are producing a positive outlook for the Egyptian Stock Exchange (EGX).
A few years ago, equity investment was not the go-to option for many people, given the appeal of bank certificates, whose yields skyrocketed to 27 per cent two years ago.
The up arrows of the EGX in 2025, however, showed that its performance outstripped returns on bank certificates. Registered investors rose to 276,000, an increase of 20 per cent year-on-year, stated Islam Azzam, the EGX chairman, attributing the growth to the expansion of mobile trading which has encouraged more youth participation and boosted market activity.
Market capitalisation of the EGX rose by 38.2 per cent, reaching 16.5 per cent of GDP, while the main index gained more than 47 per cent. According to Azzam, speaking last week, return on equity for the EGX 100 stood at 30 per cent in 2025, exceeding returns on bank deposits.
Rania Yacoub, a board member of the EGX and chair of investment firm Three Way, said that investors’ returns from the bourse in 2024 and 2025 had been high, with the Egyptian market outperforming several regional and emerging markets.
She added that some shares had recorded hikes of more than 50 per cent, including Telecom Egypt, the Commercial International Bank, and the Talaat Moustafa Group.
Yacoub expects that with the expiry of high-yield bank certificates, part of the liquidity will be redirected towards the bourse.
Maintaining a positive outlook, Yacoub anticipates more green arrows for the EGX, citing the latest report from US investment bank Morgan Stanley, which said that Egyptian equities are trading at a discount of around 46 per cent to their fair value, with price-to-earnings multiples remaining low.
Companies are also distributing sizeable dividends, further enhancing the appeal of equities, the report noted.
Mohamed Abdel-Hadi, managing director of the Watheeqa Securities Brokerage, said that 2025 had witnessed the largest rise in the EGX main index since its inception, reaching 42,600 points, a gain of 47.5 per cent, or around 13,200 points.
The EGX 70 index also climbed by more than 60 per cent.
Comparing stock market returns with those for bank certificates and gold, Abdel-Hadi said equity investors ranked second only to gold investors, with gold prices rising by more than 60 per cent.
Ihab Rashad, deputy chair of Mubasher Capital Holding, said that silver investors were the most profitable, with prices surging by over 100 per cent, followed by gold, and then equities.
He described the EGX as one of the strongest performers in the region. He noted gains of 28 per cent in Amman, 27.7 per cent in Kuwait, 17 per cent in Dubai, 6.1 per cent in Abu Dhabi, 4.1 per cent in Bahrain, and 1.8 per cent in Qatar, while the Saudi market declined by 12.8 per cent in line with a drop of more than 18 per cent in Brent crude oil prices in 2025.
Abdel-Hadi concurred, adding that the comparatively weak performance of other regional markets was likely to persist this year amid expectations of continued oil price declines following increased US control over Venezuelan oil.
In addition, the EGX outperformed in terms of rising trading volumes, the growing number of individual registered investors, and the renewed return of foreign investors, Yacoub stated.
The Financial Regulatory Authority (FRA) is preparing to introduce a range of new instruments this year, with initial steps already under way. On Sunday, the FRA granted the EGX its first licence to operate futures, enabling it to launch a derivatives market.
Mohamed Farid, chair of the FRA, said the move was “a starting point for futures trading for the first time in Egypt’s history”.
He noted that trading in derivatives and permitting short selling activity will take place in the first quarter of 2026, and that the market is capable of accommodating these tools. He added that 55 per cent of listed companies have approved longer trading hours to enhance activity and flexibility, a measure expected to come into effect in March.
Azzam recently said on TV that a number of foreign funds have requested meetings with EGX officials based on their intention to enter the Egyptian market in the light of the introduction of derivatives.
Financial derivatives are instruments or contracts whose value is derived from an underlying asset, such as shares, price indices, or other assets specified by the FRA. They may take the form of futures contracts, options, swaps or other contracts.
Trading regulations for the derivatives market are set to be issued soon, with futures contract maturities ranging from three to six months, Azzam stated.
Abdel-Hadi believes that the new instruments will increase the number of foreign investors seeking to hedge against price declines in the commodity markets. He expects they will attract a new group of investors active in stable markets such as oil, gold, and other commodities, as well as foreign and domestic funds, boosting trading volumes.
Yacoub agreed, saying that a derivatives market was one of the key tools that should have been introduced earlier and noting that foreign investors and funds will find the derivatives market appealing.
Futures contracts are binding agreements to buy or sell securities or price indices at a future date, based on an execution price agreed at the time the contract is concluded. According to an FRA statement, seven brokerage firms have applied for licences to operate in futures brokerage in Egypt.
Azzam said last month that the market was preparing to receive eight new company listings this year, including firms in the healthcare and tourism sectors. Expectations are high that the year could rank among the strongest for initial public offerings (IPOs) in the EGX’s history, in addition to the anticipated government offerings.
Rashad expects the new listings to attract more Arab, foreign, and domestic investors, particularly as price-to-earnings multiples of listed stocks remain lower than those in neighbouring markets. He added that IPOs bring fresh liquidity, pointing to a likely increase in available market liquidity.
Abdel-Hadi noted that when new companies are listed, they often trigger a repricing of other listed companies within the same sector. As a result, many stocks currently trading at low earnings multiples and below their fair value are likely to be revalued.
Yacoub expects the establishment of the cabinet’s State Asset Management Unit under Law 170/2025, tasked with inventorying state assets, will reinvigorate the IPO portfolio.
* A version of this article appears in print in the 22 January, 2026 edition of Al-Ahram Weekly
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