[2008-02-05]  Egypt stock market to launch ETF, derivatives
Egypt's bourse plans to launch an exchange traded fund for blue-chip equities in the coming months and stock and index futures and options next year, the head of the exchange told Reuters in an interview on Monday.

"We are negotiating with Beltone (Financial) to launch an Egyptian ETF (exchange traded fund) based on our CASE 30 in the second quarter of 2008, by May or June, to be listed on the Cairo and Alexandria (stock) exchange," said Maged Shawky, chairman of the Cairo and Alexandria Stock Exchange (CASE).

The CASE 30, which groups the stocks of the top Egyptian companies in a benchmark index, has risen more than five-fold since Egypt launched an economic reform drive in July 2004.

Shawky said that the exchange was putting in place a new trading platform built by Nordic bourse OMX AB in order to increase trading capacity and offer derivative financial products by the middle of 2009.

"We are very open to what the issuers want to offer. We get a sense that there is interest for contracts regardless of whether it is futures or options on the index as well as for the underlying stocks," he told Reuters on the sidelines of an Egyptian investment forum at the New York Stock Exchange

(NYSE).

The launch of these products and the new trading platform could at least double the current daily trading volume of $150 million-$180 million over the next two years.

"That is a very conservative estimate," he said. "Of course we are giving consideration if there is a true story about recession, definitely it could affect us but I think this (volume) is reasonable over two years."

Shawky said the current market capitalization is about 750 billion Egyptian pounds or about $150 billion, which is equivalent to roughly 100 percent of the nation's gross domestic product.

The CASE 30 is down 0.46 percent this year amid the global financial market turmoil. That pales in comparison to the 51.29 percent gain in 2007; 10.26 percent rise in 2006, and the whopping 146.29 percent rise in 2005.

Asked if he expected the stock prices to continue their rally through the end of 2008 he said: "I think in this period of time, all around in terms of the Gulf market, are very volatile and abroad its very volatile, I think we will move sideways for quite a while until markets have restabilized."

The exchange has 435 listed companies. Shawky said that perhaps two or three big initial public offerings will make it to the market this year.

"One of them from Bank of Alexandria. It was acquired by an Italian bank. We are targeting this year. There is a remaining stake that we want to offer in the market, about 15 percent," he said.

Bank of Alexandria is a subsidiary of Italy's Intesa Sanpaolo. It is Egypt's largest private bank in terms of size and branch network, with 188 branches and outlets accounting for approximately 10 percent of all bank branches nationwide.

The Egyptian government plans to offer its 15 percent stake in the bank on the Egyptian stock market.


Source: © Reuters 2008.