Public capital increases up on last year by 800%

The 2013/14 financial year witnessed a boom in capital increases offered through Egypt’s stock exchange. Public capital increases for listed companies reached LE10 billion, more than eight times the level achieved in 2012/2013.

The first half of calendar year 2014 has been particularly strong, noted EGX Chairman Mohamed Omran in a statement Wednesday. From January to June 2014, capital increases reached LE5.5 billion, more than the total recorded during all of 2013, and more than four times 2012 levels.

This period included Egypt’s first initial public offering since before the January 2011 Revolution. Arabian Cement, raised US$100 million in a May IPO that was oversubscribed by 18.5 times. 

According to Omran, the demand for Arabian Cement stock reflects investors’ positive estimates about the country’s economic performance.

Omran also attributed the overall uptick in capital increases to improvements to regulations for listing companies, which have cut red-tape and reduced the approval time to as little as 24 hours.

Despite a shaky macro-economic picture, Egypt’s stock market has moved from strength to strength in 2014. At the close of the July 16 market day, the benchmark EGX30 was up 26 percent year-to-date.

Total market capitalization hit LE477.60 billion at the end of June, up from LE426.80 billion at the end of 2010, according to EGX figures. That puts it below the LE488.20 billion recorded at the end of 2010, but well above LE293.60 billion at the end of 2011 and LE375.6 billion at the end of 2012.

The total value of traded stocks is also making a recovery. In the first half of 2014, the value traded was just over LE169 billion, compared to LE161.8 billion in the entire 2013 calendar year. That puts the exchange well on track to reach 2010 levels of LE321.4 billion.

Likewise, in the first six months of 2014, more than four million transactions were made, compared to 4.79 million in all of 2013. In 2010, more than 10.2 million transactions were recorded.

Omran predicts that these trends will continue, thanks to “serious governmental steps” to reform the economy and increase investor confidence in Egypt’s economic future.

Since coming into office, President Abdel Fattah al-Sisi has implemented a number of economic reforms, including reducing energy subsidies and increasing taxes.