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Sunday, 28 March 2021

Re-energized small-cap index coming to a market near you at the end of the year

The EGX30 ended today’s session flat on turnover of EGP 685 mn (53.5% below the 90-day average). Foreign investors were net sellers. The index is up 0.2% YTD.

In the green: Pioneers (+3.3%), Oriental Weavers (+2.2%) and Telecom Egypt (+2.1%).

In the red: Eastern Co. (-2.1%), Export Development Bank (-1.4%) and GB Auto (-1.3%).

The EGX is in early talks with three unnamed banks to list their SME subsidiaries on the revamped small-cap index dubbed “Tamayoz'', which will replace the NileX index, bourse chairman Mohamed Farid told us this morning.

Twenty-eight companies have so far applied to join the new index, and the EGX is currently evaluating their suitability for inclusion, the chairman noted. The final list will be announced in the second half of the year, he said.

But what is the criteria? Details on the eligibility criteria remain sketchy, with Farid only telling us that companies should be in a strong financial and operational position before being considered for entry.

The EGX plans to launch Tamayoz' before the end of 2021, Farid tells us. In the meantime, the bourse is also trying to convince the banks and asset managers to buy into small cap stocks in a bid to stimulate demand and thus boost market liquidity, he added.

Background. The small-cap exchange being restructured and rebranded under a plan being undertaken by the EGX alongside the European Bank for Reconstruction and Development (EBRD) to help SMEs access equity finance and increase their competitiveness. The EBRD offered in September to cover up to 70% of the costs paid out by Nilex-listed SMEs for financial sponsors, and a month later the Financial Regulatory Authority eased rules on sponsorship and slashed evaluation fees by 50% to encourage small firms to go public.

EARNINGS WATCH- Al Ezz Dekheila Steel’s (EZDK) losses eased slightly to EGP 4.7 bn in 2020, compared to a EGP 5.2 bn loss the year before, according to the company’s earnings release (pdf). This came despite revenues falling almost 11% to EGP 33.9 bn, down from EGP 38 bn in 2019.

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