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The Egyptian Exchange (EGX) in the listing committee meeting which was held yesterday approved to list the first Exchange Traded Fund (ETF) certificates in the Egyptian stock market, based on EGX 30 index with initial value of LE 10 Million, to be the first time to list this tool in the Egyptian market.
ETFs are similar to traditional investment funds in being formed of a set of securities traded in the stock exchange, but the main difference is that ETFs is committed to follow a certain index performance (represented in EGX 30 index in this case) and so its performance is close to the index performance. In the same time ETFs trading will be allowed at anytime during the trading session through brokerage firms as the remaining stocks.
From his part, Dr. Mohammad Omran, EGX chairman stated " we are glade to list ETFs which is an important instrument for investors in managing their portfolios, and it's an important requirement for investors who want to diversify their investments in the Egyptian market. In my opinion ETF is not just a new financial paper added to the list of securities, but it's a new financial instrument that contributes to the Egyptian market efficiency and its transfer from the traditional market form with limited trading tools to a modern market that keeps track with the latest developments and complies with the investors requirements ". Omran pointed that this tool will help to attract a new segment of investors to the Egyptian market. This segment is unable to allocate its investments in certain stocks in the market, so instead of this situation the investor will be able to invest in 30 shares at once easily and at a lower cost.
Omran said " a part of my pleasure with this important step is that we have fulfilled what we promised which is listing ETFs before the end of the year 2014, to be an achievement added to the current year' achievements. In the coming period there will be awareness campaigns to inform the market with this new tool."
It is noteworthy that ETFs were first used since almost two decades and their number was increased worldwide to more than 3,600 ETFs, third of them is in U.S.A.. ETFs are spread in 61 countries. It's estimated that ETFs investment size will be more than $ 2.5 Trillion.
