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Wednesday, 28 July 2021

EGX30 change-up next week

Six companies will become constituents of the EGX30 when the latest rebalancing of the benchmark index takes effect on Sunday, the EGX said today (pdf). The EGX30 is reviewed (or “rebalanced”) twice a year, at the beginning of February and August. Other indexes including EGX50 EWI and EGX70 EWI have also been rebalanced (details in the EGX statement).

Who’s being added to the EGX30?

  • Education outfit CIRA
  • Misr Fertilizers Production Company (MOPCO)
  • Speed Medical
  • Raya Holdings
  • Rameda Pharma
  • Egyptian Resorts Company

Who’s rotating out?

  • CI Capital
  • Orascom Financial Holding
  • Orascom Investment Holding
  • Emaar Misr
  • Export Development Bank of Egypt
  • Sodic
  • Edita

Why are six companies being added, but seven rotating out? Don’t worry, there will still be 30 companies in the EGX30 on Sunday: OIH’s spin-off of OFH means both are leaving the benchmark.

A new set of rules that came into effect this month mean no more than five companies from any one sector can be constituents of the benchmark EGX30. Companies rotate into and out of the EGX30 based on their freefloat and trading volume in the shares. Constituents must also have a minimum issued capital of EGP 100 mn, or its equivalent in foreign currency.

It’s no surprise that real estate and non-bank financial services players are rotating out: Each of the two sectors had at least six companies each as current constituents of the EGX30.

This is the second big change to index criteria to take place this year. In the February rebalancing, the EGX tweaked criteria to give more weight to companies with large market capitalizations, saying the move would make the index more attractive to foreign investors. Those regulations require constituents to have a freefloat market cap equal to or greater than the median average of the 60 most actively-traded companies. Constituents must also have a minimum 15% freefloat, be traded on at least 65% of trading days during the rebalancing period, and cannot have 30% of their shares or more in cross-holdings.

Who joined the EGX30 last time ‘round? Payments giant Fawry, investment bank and NBFS player CI Capital, consumer stalwart MM Group, state-owned Abu Qir Fertilizers, and Alexandria Mineral Oils Company (AMOC).

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