Cairo: Egypt’s stock exchange said on Thursday it would reduce the free float required for new companies to list on its benchmark EGX30, as part of structural changes to the index with the aim to boost trading in the Arab world’s most populous country.
Companies were previously required to have a 15 per cent free float to list on the EGX30. Under the new rules, which take effect on August 1, firms will be able to join with a minimum 5 per cent free float as long as the market value of the float is at least 100 million Egyptian pounds (Dh48 million, $13 million).
The reforms aim to help reinvigorate trading in Egypt, which has struggled to win investor confidence during years of political and economic turmoil since a popular uprising in 2011.
“For a company to enter the EGX30, its shares had to be traded 50 per cent [of trading days] in the last six months,” Mohammad Omran, the head of Egypt’s bourse, said.
“This isn’t right because it means if there’s an actively traded company but it is newly listed, then it couldn’t join the index,” said Omran.
The new rules stipulate that a company’s shares have to be traded on 75 per cent of the trading days since its listing date.
That move could prompt the addition to the EGX30 of Egyptian foodmaker Edita, which first listed in April.
The free float reduction could also pave the way for the entrance of Orascom Construction into the index, since its free float is less than 15 per cent but the market value of its free floating shares is more than 100 million Egyptian pounds.
Omran also said the bourse planned to launch a new equal-weighted index that would include the top 50 companies in terms of liquidity from August 1.
“Each company will have only a 2 per cent weight of the overall index,” he said.
