The bi-annual review, or rebalancing, of the index is a type of index maintenance that adjusts the listed companies to ensure that the index’s overall goal is still represented properly
In its latest review for its benchmark index, the Egyptian Exchange is adding 6 new companies to the EGX 30.
Being included in the new shuffle will be Cairo for Investment and Real Estate Development, Misr Fertilizers Production Company (MOPCO), Speed Medical, Raya Holdings, Rameda Pharma, and Egyptian Resorts Company.
They will be taking the places of 6 companies that are being rotated out of the index.
These are CI Capital, Orascom Financial Holding, Orascom Investment Holding, Emaar Misr, Export Development Bank of Egypt, SODIC, and Edita.
Orascom’s Investment Holding’s exit of the benchmark, which is a spin-off of Orascom Financial Holding, means that there will still be 30 companies on the index, with both leaving at the same time.
The bi-annual review, or rebalancing, of the index is a type of index maintenance that adjusts the listed companies to ensure that the index’s overall goal is still represented properly.
The EGX also has a set of new rules coming into effect this month, meaning that 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 million, or its equivalent in foreign currency.
With this rule in mind, the shuffle isn’t surprising as each of the two sectors had at least six companies each as current members of the EGX30.
The new rules are coming right after another recent major change to the index criteria.
The EGX had previously changed the criteria to give more weight to companies with large market capitalizations, stating that it would increase its attractiveness to foreign investors.
It requires companies to have a freefloat market cap equal to or greater than the median average of the 60 most actively-traded companies, as well as 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.
