Egypt stock exchange unveils plans to spur trade

Ahram Online, Monday 9 May 2011

Exchange-traded funds and short-selling will be introduced soon while derivative trading is a possibility, says Bourse chairman

stocks rise
Bourse hopes new tools will boost trade (Photo: Reuters)

Egypt's stock exchange plans to introduce exchange-traded funds and allow short-selling to boost trading and give investors greater access to local markets, Bourse chairman Mohamed Abdel Salam has announced.

Interviewed by Bloomberg in Dubai on Sunday, Abdel Salam said the Bourse will introduce "same-day" short selling and lift a restriction on intraday trading this month.

Intraday trades have been suspended since the stock market's reopening in March, following a two-month closure during the uprising that removed President Mubarak in February.

The Bourse's benchmark EGX30 index has plunged 32 per cent since January, making it the world's worst performer. Average trading volumes have fallen 30 per cent compared to the same period last year.

Egypt's unrest delayed plans to introduce exchange-traded funds (ETFs) to the market, Abdel Salam told Bloomberg.

ETF's are designed to mirror the performance of stock indexes, allowing investors to trade in shares of entire portfolios in a single security. The UAE and Saudi Arabia have both introduced ETFs in the last year.

Short-selling assets on the "same day" -- where investors betting on losses have to complete transactions before the end of trading -- will prepare the market for ETFs, Abdel Salam said.

Derivative trading may be on the cards too but are unlikely to be introduced this year so as not "to increase risks at this stage," Abdel Salam said.

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