Arab Finance: The Egyptian Exchange (EGX) is considering launching a new index that merges sustainability and Islamic Sharia principles, along with efforts to raise capital of listed companies valued below EGP 100 million within a year, EGX Chairman Ahmed El-Sheikh told Asharq Business.

These initiatives are aimed at increasing market liquidity and attracting a broader base of investors, El-sheikh added.

In June, the EGX introduced the Islamic Sharia-compliant index, which includes 33 companies that meet Islamic financial guidelines, led by Talaat Moustafa Group Holding’s (TMG Group) stock, accounting for 15% of the index's weight.

Currently, the EGX’s main market features around 40 companies with capital below EGP 100 million, such as Arabian Food Industries (Domty), Egypt Duty Free Shops, Arab Drug Co, Alexandria Pharmaceuticals and Chemical Industries, and Arab Aluminum.

El-Sheikh emphasized the importance of developing sector-specific indices and promoting their adoption among portfolio managers and investment funds to enhance market dynamics.

He also disclosed a study on revising listing and delisting regulations to align the free float trading percentage requirements with a percentage of market capitalization rather than the current fixed percentage.

As per listing regulations, free float shares in an Egyptian company shall not be less than 10% of its total shares, or at least not less than 5% of the company’s shares.

Proposed amendments could add flexibility, allowing large companies with free float shares below 10% to remain listed, which El-Sheikh noted would address the diverse valuations across listed entities.

It Is worth noting that Domty is among those at risk of delisting, following a voluntary buyout offer by a Danish company that may delist Domty from EGX if the acquisition proceeds.

Similarly, Cira Education faces delisting potential amid rising speculation about other large companies contemplating exit plans from the EGX.

To strengthen the small and medium enterprises (SME) sector, El-Sheikh announced a collaboration with the Financial Regulatory Authority (FRA) to increase the minimum capital requirement for SMEs to EGP 25 million, up from the current EGP 1 million.

The EGX currently mandates that SME listings have capital between EGP 1 million and EGP 100 million.

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