CAIRO: The Egyptian Exchange (EGX) launched its first exchange traded fund (ETF) XT-MISR Wednesday at a total value of 10 million EGP ($1.4 million) divided into 1 million certificates of 10 EGP each.
The announcement came during a press conference Wednesday in the presence of EGX chairman Mohammad Omran, Minister of Investment Ashraf Salman and Head of the Egyptian Financial Supervisory Authority (EFSA), Youm7 reported.
These funds allow investors to cover markets in different countries or sectors at costs lower than other investments. In April, the EGX granted Beltone Financial Holding Company a license for establishing XT-MISR, the first ETF in Egypt, through the main EGX index EGX30.
Launching the 1st ETF will add a new category of investors to Egypt’s stock market, as they will get the benefit of trading a single security that reflects the performance of the top 30 companies listed in the EGX,” Mohamed Kotb Head of Mubasher Asset Management told The Cairo Post.
From an investor’s perspective, this product is an easy and a cost efficient trading tool when compared with the cost of investing in traditional mutual funds, Kotb said.
Moreover, ETFs is a way of diversifying an investor’s funds among a variety of stocks & sectors which in general minimizes the risk of investment. It also achieves transparency as investors are well informed about investment details and constituents.
“On a macro level, ETFs could be a good tool for promoting investment in general for Egypt since the ETF will ultimately reflect the stock market performance which is basically a mirror of macro and micro economic performance that’s largely expected to improve gradually on the medium-term,” Kotb concluded.
Egypt’s stock market witnessed a “great” performance in 2014, as the benchmark index EGX30 surged to a 6-year price high, according to Osool Securities Brokerage technical analysis head Ehab Saeed.
The index hit 9,835 points, the highest since 2008, and 46 percent higher compared to its level at 6,774 points at the end of 2013.
The EGX is expected to list 10 new companies during the first half of 2015, Youm7 quoted Omran saying during a press conference held late December.