Dubai: Nasdaq Dubai and Egyptian securities clearing house have signed an agreement that would facilitate dual listing of companies, officials said on Thursday, a move that deepen the capital markets in both countries.
“This link will facilitate number of opportunities that will allow dual listing of companies and investor can transfer their shares into two exchanges,” said Hamed Ahmad Ali, chief executive officer with Nasdaq Dubai.
This will facilitate movement of cash and securities from investors between two countries, with the counter party risk handled by both exchanges, providing the investors with arbitrage opportunities.
“Instead of taking risk with counter party with Egyptian broker, if he wants to buy, he should deliver cash with his broker in Egypt, so instead of taking this risk, he will take the risk of Nasdaq Dubai,” said Mohammad S. Abdul Salam, chairman and managing director of Misr for Central Clearing Depositary and Registry (MCDR).
This will also help in investor accessibility and taking UAE companies to Egyptian investors and vice versa.
“It opens up a new market for investors and it will give them flexibility to hold a share in whichever market they feel it’s more suitable. The issuers will get more visibility in two markets,” Ahmad Ali said.
Nasdaq Dubai said there is interest in Egyptian companies to explore opportunities and are in talks with those companies for dual listing but he declined to give details.
“There are a good number of Egyptian companies that would benefit from expanding their visibility and reaching out to new types of investors,” said Ahmed Ali.
About 14 billion Egyptian pounds is being invested by the UAE individuals and investors in Egyptian market.
Currency risk
Nasdaq Dubai said it is ready to do listings in Egyptian pounds as well.
“We can also have listing in Egyptian pounds, if that is required. For us the currency is flexible and it is not a challenge. We could have the same the same currency as the primary jurisdiction or US dollars,” said Nasdaq Dubai’s Ahmad Ali.
Meanwhile, Egypt’s pound held steady this week both at a central bank dollar sale and on the black market. The bank said it sold $37.6 million at a cut-off price of 7.1401 pounds per dollar, unchanged from the previous sale on Wednesday.
“The risk will be managed by the client and I don’t think the client doesn’t know that there’s a risk on currency,” said Salam.
Spend more time
“We will spend more time in Egypt, speaking to a number of parties, number of government agencies, investors, and brokerages firms as well, where we could tell them what this level of collaboration can bring in,” said Ahmad Ali.
The total market capitalisation in Egypt stands at $72 billion. Nasdaq Dubai is also looking a tie-ups with a couple of exchanges outside the Middle East.
