Back to the complete issue
Thursday, 25 March 2021

CBE to provide EGP 1 bn to set up new EGX fund

A fund created yesterday to boost trading volumes on the EGX is getting EGP 1 bn as a preliminary allocation from the Central Bank of Egypt (CBE), CBE Deputy Governor Rami Aboul Naga tells Asharq Business. The allocation for the fund, which the Financial Regulatory Authority gave the green light yesterday, is only a starting point and is expected to increase periodically when needed, Aboul Naga added. The fund is expected to be launched within the next few days, he said.

What’s this fund about? In a bid to support market stability and boost liquidity after the bourse erased its year-to-date gains with several consecutive days of losses, the fund will be structured to allow brokerage companies to access financing at competitive rates to support margin trading, EGX Chairman Mohamed Farid told us yesterday. Authorities have yet to decide eligibility criteria, Farid said. We still don’t have information on who would own and manage it, or how it will work.

Background: This isn’t the first time the CBE has stepped in to make sure the market moves smoothly. Last year, at the height of the covid-induced sell off in global emerging markets, the central bank said it would directly purchase up to EGP 20 bn of equities — more than 5% of the total EGX100 market cap at the time. As of January, the CBE had used up EGP 500 mn of the total allocation. The new fund is designed to ensure retail investors continue to have appetite for Egyptian equities.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.