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Country PresentationCASE Vision & Plans
Dr. Shahira Abdel ShahidAdvisor to the Chairman
11 September 2005
(CASE)
Topics
• Overview of CASE
• CASE Strategic Vision
• CASE Competitive Advantage
• CASE Recent Developments
• CASE Ongoing Plans
• Latest Market Statistics
Overview of CASE-1
Starting in the 1880’s= Alexandria
1883, Cairo 1903.
5th Largest Exchange in the World in
the 1940’s. Active Role through the 1950’s.
Dormant for three decades due to
socialist & central planning systems.
Overview of CASE-2
Re-emergence in 1992 (Capital Market Law,
Privatization Program & private placements
whereby private companies started tapping the
capital market).
CASE started its modernization program in
1997, the Exchange is currently implementing
another phase of its modernization to meet the
challenges of globalization, competition &
internationalization of markets.
CASE Strategic Vision
Goal----operate a quality market through
enhancing regulation & market infra-
structure.
Geographical focus------Egypt, Middle
East & Africa.
Business Focus----------on core market
operations such as trading, information
services & market systems.
Building a Quality Market
Improve market infrastructure.
Increase market liquidity.
Foster transparency & corporate governance
culture.
Raise customer satisfaction & investor
confidence.
Improve investor education & information
dissemination.
CASE Competitive Advantage-1
One of the most open financial markets in
the Middle East North Africa (MENA)
region- free float of CASE 30 Index
reached 40% end of June 2005.
No dividends, capital gain taxes & stamp
duties.
No controls on foreign investment or
investors.
No restrictions on foreign securities firms
(brokers) or issuers.
CASE Competitive Advantage-2
No restriction on the repatriation of capital &
dividends.
Active retail & institutional participation.
Settlement is t+1 for government bonds, t+2
for most active stocks list & t+3 for remaining
securities, following international standards.
Foreign investors represented 30% of total
trading in 2004 & over January-June 2005.
CASE Competitive Advantage-3
Low listing/trading fees in relation to MENA
region. Well diversified sectors/companies are listed on
CASE including communications, financials, petrochemicals, building materials, consumer goods, tourism etc.
Egypt is included in MSCI, FTSE and S&P/IFC
indices.
Local presence of international investment
banks & custodians e.g. Citigroup, HSBC,
American Express etc.
CASE Competitive Advantage-4
Presence of large foreign institutional investors
including Merrill Lynch, JP Morgan, Morgan
Stanley, Arab funds, emerging funds, high net
worth individuals.
High dividend yield on average 7% in the last
three years.
Attractive P/E ratio on average 12 times in the
last three years.
CASE Framework
Ministry of InvestmentCentral Bank of Egypt )CBE(
General Authority for Mortgage Financing
Mortgage Financing Companies
Real Estate Valuation Experts
Mortgage Financing Intermediaries
Mortgage Financing Agents
Mortgage Financing Activities Guaranty & Subsidizing Fund
Higher Council for Insurance
Public Insurance Companies
Private Insurance Companies
Reinsurance Companies
Capital Market Authority (CMA)
Cairo & Alexandria Stock Exchanges
Clearing & Settlement & Depository
Investment Banks
Brokers
Asset Management Firms
Primary Bond Dealers
Venture Capital
Rating Companies
General Authority for Investment and Free Zones
Corporate Companies
Free Zones
Industrial Parks
Public Banks
Private Banks
Joint Ventures
Foreign Banks
Specialized Banks
CASE International Affiliations
CASE is an Affiliate member of WFE, expected to be a Full member of WFE next November 2005.
Member of ASEA, FEAS, Union of Arab Stock Exchanges.
Signed joint agreements with most Arab exchanges including Kuwait, Morocco, Oman, Bahrain, Jordan, Sudan & Abu Dhabi.
Signed MOU with London, Madrid, Korea, Johannesburg, Malta, Malaysia, India,
China etc.
Egypt for Information Dissemination-1
Egypt for Information Dissemination (EGID)
was established in 1999 as a fully-owned
subsidiary of CASE to enhance market
transparency.
EGID combines technology with information
to improve the efficiency of financial markets
in the Middle East North Africa (MENA)
region.
Egypt for Information Dissemination-2
EGID transmits CASE data internally &
externally such as Reuters & Bloomberg etc.
EGID avails CASE issuer information using
several delivery channels, latest of which, is
mobile phones.
EGID develops market software solutions for
exchanges such as Surveillance & Disclosure
Systems.
CASE Regulatory Developments-1
In April 2003, the SEC approved CASE as a
designated offshore securities market under
Regulation S of the Securities Act of 1933.
This classification is in recognition of high
standards attained by CASE.
CASE implemented new listing rules in 2003,
which improved corporate governance &
disclosure practices for issuers.
CASE Regulatory Developments-2
Continuous review of trading rules to meet
market needs such as Liquid versus Less-liquid
market, Primary Dealers Market, removing
price cap on 35 most active stocks, re-
arranging the OTC market.
CASE has new membership since 2004 rules
which categorizes members according to
activities, ensures financial integrity of
members, their professionalism, fair
dealings with customers, etc.
CASE Technological Developments
CASE implemented an enhanced version of its developed Surveillance System in 2004 that included more features & functions to ensure investor protection & fairness.
CASE developed a Primary Dealers System, which was implemented in November 2004 for government securities.
Linking CASE trading system with the clearing & settlement system of MCDR (in a step towards having a seamless Straight Through Processing Solution).
CASE Information Dissemination
CAE re-launched 4th version of its web site www.egyptse.com on 1 September 2005, which includes additional features & information about CASE vision, rules & regulations, products, material news of listed companies, members, market data, etc.
Strengthened the Disclosure Department to provide market participants with timely & useful information.
Enhanced the quality of information provided by EGID.
CASE Public Awareness-1
o A public awareness campaign through Stock Riders games & publications in sports clubs & universities. CASE in coordination with the Ministry of Communications has provided on-line education through Stock Riders Out Reach Program since 2003.
o CASE will hold its annual Borsa Step by Step Event in November 2005, which is a forum including CASE, MCDR, CMA, market participants & the public at large.
o Encouraging tours from university students.
CASE Public Awareness-2
o CASE has successfully conducted two educational programs in Egypt’s largest & oldest universities i.e. Cairo & Ain Shams in the first half 2005, covering the basics of investment in the capital market. The programs were well received by students (more than 100 students in each university).
o More educational programs will be conducted in other universities in order to educate prospective investors about the basics of investment in the capital market.
CASE Ongoing Plans-1
Introduced intra-day trading rules on 9
August 2005.
Introduce margin trading, to be followed by
short selling & Internet trading, before end of
2005.
Encourage listing & trading of Islamic
products on CASE )Co-organized for the first
time a conference on Islamic finance with
HSBC Egypt & HSBC Amanah(.
CASE Ongoing Plans-2
Introduce ETFs on CASE 30 Index in 2006.
Link CASE electronically with 30 top issuers to
disseminate information online i.e. provide a
facility like Regulatory News Service at LSE by
end of 2005.
Encourage blue chips from Egypt & MENA
region to list on CASE. The first of which was
Raya Holding . CASE is in discussions with
other issuers locally & regionally.
Main Trading Statistics-1
• CASE 30 Index a free-float market
capitalization weighted price index. It includes
the top 30 companies in terms of liquidity.
CASE 30 surged by 134% in 2003, 122% in
2004 & 87.5% end of August 2005: due to
Egyptian pound flotation January 2003, new
Cabinet & new laws (taxes & customs), speed
up of privatization sales, sound corporate
results, CASE strong efforts to enhance
disclosure.
Performance of MSCI-Egypt vs. other Emerging Markets )Jan 2004 – December 2004(
87.5
76.6
59.1 58.6
-4.0
24.124.624.6
125.7
-0.8-0.2
4.16.57.88.6
118.2
45.4 45.0 44.540.7 38.5
30.520.0 18.4 17.6 16.5 11.8
-40
-20
0
20
40
60
80
100
120
140
Co
lom
bia
Eg
yp
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Hu
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Me
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Ind
on
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ica
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ail
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d
%
Performance of MSCI-Egypt vs. other Emerging Markets )Jan 2005 – August 2005(
32.8 31.9 31.725.5
20.0
12.0
38.9
10.77.8
3.35.2
40.540.6
60.5
76.6
-30.5
19.3
14.416.717.3
100.9
-5.5
-2.4
0.10.31.52.5
-40
-20
0
20
40
60
80
100
120
Eg
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Jo
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Arg
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%
Main Trading Statistics-2
• CASE 50 or Liquid Market accounted for
more than 75% of total trading.
• Market Capitalization amounted to $ 59.5
billion end of August 2005.
• 125 brokerage firms where the top 30
brokers accounted for 80% of business
volume.
• Average daily turnover amounts to $ 100
million.
Main Trading Statistics-3
• P/E ratio = 16 Dividend Yield = 5%
• Government securities market witnessed
more activity over the period (4 November
2004-31 August 2005) i.e. $ 1,529 million
after the implementation of Primary Bond
Dealers System.
• 9 GDRs listed on London Stock Exchange,
one on Luxembourg Exchange & one on
NYSE.
Market StatisticsNo. of Listed Shares Millions
(2000 – August 2005)
4,673
5,433 5,6006,218
6,5737,222
0
2,000
4,000
6,000
8,000
2000 2001 2002 2003 2004 2005
Market StatisticsTotal Volume Traded Million
(1993 - August 2005)
1,108 1260
904
1,422
2,435
1,622
2,911
0
500
1,000
1,500
2,000
2,500
3,000
2000 2001 2002 2003 2004 Jan-Aug 04 Jan-Aug 05
Market StatisticsTotal Value Traded US$ million
( 2000 - August 2005)
13,814
6,9127,397
4,514
6,808
3,846
15,239
0
4,000
8,000
12,000
16,000
2000 2001 2002 2003 2004 J an-Aug 04 J an-Aug 05
Market StatisticsTop Sectors in Terms of Market Cap
(August 2005)
1.8%1.8%2.2%6.2%
33.8%
25.5%
10.0%
4.2% 3.7% 3.6%
0
5,000
10,000
15,000
20,000
25,000
30,000
Tele
Com
mun
icat
ion
Build
ing
Mat
eria
ls &
Cons
truct
ion
Fina
ncia
l Ser
vice
s
Min
ing
& G
as
Food
& B
ever
age
Ente
rtain
men
t
Chem
ical
s
Hol
ding
Com
pani
es
Hou
sing
& R
eal
Esta
te
Hea
lth &
Phar
mac
eutic
als
Total Market Capitalization= $ 59,582 million
Market StatisticsEgyptians vs. Foreigners in terms of Value Traded )August 2005(.
Foreigners28%
Egyptians72%
Total Value Traded on Market )listed securities( = $ 2,165 Million
Market StatisticsComparative Valuation of S&P/IFCG IndexesP/E ratio vs. Dividend Yield )August 2005(
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
P/ E Ratio
EgyptHungary Peru
China
Mexico
Morocco
Czech Republic India
Jordan
South Africa
Saudi Arabia
DY %