Minister to Discuss Capital Market Development Plan

The Minister of Investment, Mahmoud Mohieldin, met with the Board of Directors of the Egyptian Stock Exchange to review the Egyptian capital market development plan, to take effect soon. He said the 5-pivot plans aims to develop the capital market and place Egypt as one of the top financial centers at the regional level.

In the first pivot there would more development in circulation and settlement markets through reducing transaction procedure costs and settlement time. The second pivot aims to develop the bonds market to make it an effective market in mobilizing savings and converting them into investments.

For this to happen, corporate bonds issuance procedures would be streamlined and credit classification company start-ups encouraged in order to create the required competition in this field. This would help reduce issuance time and costs and upgrade the rules related to bond investment funds, as well as organizing issuances of finance certificates to diversify the investment tools on the Egyptian market. It also includes the development of programs of circulation on bonds and the innovation of new financial tools such as buy back contracts, as well as raising disclosure rates on bond circulation transactions.

The third axis aims to stimulate the activity of the Nile Stock Exchange (Nilex) to increase funding for SMEs through more effort and coordination with the General Authority for Investment and Free Zones (GAFI), the Egyptian Institute of Directors (EIoD), and the federation and association of investors to publicize the benefits and components of Nilex in order to attract promising companies.

The fourth axis will study the regulatory and supervisory requirements of the Future Contracts Stock Exchange to provide the Egyptian market with new financial instruments helping investors and residents to hedge the risk of price fluctuations, especially in light of the financial crises and the recent fluctuations following the global financial crisis. The fifth axis aims to raise investors' awareness and improve rates of financial literacy in the Egyptian market. This will help investors know the expected returns and risks of their investments so that they could avoid investing their money in non-organized investment tools and channels.

Mohieldin said that the reforms undertaken by the Egyptian government, the Ministry of Investment, and the Central Bank of Egypt (CBE) helped many financial institutions contain the fallout of the global financial crisis. They also preserved the stability of stock and bonds markets.

Mohieldin reviewed the developments witnessed by the Egyptian capital market from July 2004 until now in terms of high trading rates whose daily average reached some LE 1.5 billion compared to some LE 150 million in 2004. In addition, the number of mutual funds increased from 26 in 2005 to 54 in 2009. Mohieldin pointed out that the most important measures to develop the capital market came within the framework of developing control and creditworthiness of securities brokerage companies. These measures also aimed to increase rates of market liquidity, provide new financial instruments and activities, such as bonds of securitization, margin trading and specialized mutual funds. These measures also aimed to launch Nilex.