The chairman of the Egyptian Stock Exchange (EGX), Mohamed Omran, expressed his enthusiasm as to the economic potential in the continent by saying “Africa is the hub. In the past Latin America was the most attractive emerging market, now we talk about the Asian Tigers, I think in the future it will be Africa. Africa has abundant natural resources, investment opportunities and economic growth expectations; in 2050, two African countries, that is to say Egypt and Nigeria, will be among the top 10 countries worldwide in terms of GDP per PPP.”, Omran told Daily News Egypt, emphasising the importance of the 16th Annual General Meeting and flagship Conference of the African Securities Exchanges Association (ASEA) that will be hosted by the Egyptian Exchange in Cairo from 2 December to 4 December 2012.
The main objective of this meeting, he said, is to send a reassuring message on the political and security sides, between 30 and 40 stock exchange heads will attend the meeting with total participation amounting to 300, half of them from outside Egypt.
The meeting will also witness intense discussions on topics pertaining to the functioning of the stock exchange, namely IT, which, according to Omran, is the most expensive and the most important component of the stock exchange. The emerging markets in Africa cannot afford the IT equipment needed. As a solution, they will discuss co-founding a company that will be the technological arm of the African stock exchanges.
Connecting the African stock markets will also be on the agenda of the meeting; an initiative to create an index that combines the listed companies in the association’s member countries will be tackled, this will allow the introduction of new financial instruments in the different markets, hence, the companies will benefit from the incoming money flow.
The alliance between Cairo and Istanbul stock exchange will be a role model for similar alliances, the anticipated grouping will be discussed on the sidelines of the conference that will be attended by the top executives of the Istanbul Exchange, clarified the EGX chairman.
He expected the operation to be finalised by 2013, otherwise it will not take place; “the time span of this project should not exceed 2013, any project must have a clear schedule” explained Omran. “It’s easy to sign memorandums of understanding (MOU) that will never materialise but most important is to come up with results, the good thing about the MOU with Turkey, is the continuing follow up, that’s why the Turkish executives are coming back in December.”
The Egyptian official revealed that there are some initiatives to link African exchange markets, but they have not yet materialised, mentioning that there are no previous experiences in creating a continent scale bourse, even in the European Union.
On his plans to activate the bonds in the secondary market, Omran stated that the stock exchange is ready with the necessary IT infrastructure, the transactions system and the link with the central clearing organisation, “the primary dealers must be obliged to transact a part of their bonds in the secondary market to set it off” he clarified.
Omran said that the new version of depository and registry rules will be issued by the beginning of 2013; all the rules that need to be modified are being assembled and will be sent to the Financial Supervisory Authority to be released in an edition that will bring together all the modifications. The modified regulations will keep up with the economic updates in the country, and will simplify the procedures while protecting the investors.
Omran commented on the recently proposed taxes on initial public offering (IPO), he said that it should not affect the market because the public offering has more advantages than the tax evasion, and even with 10 per cent tax, the Egyptian market will still be more competitive than other markets who charge 20 per cent.
The EGX head talked also about the pre-trading sessions, he said he will receive the technical component from the financial instruments trading systems company OMX by 10 December, then there will be two weeks of mock trading sessions before finally implementing the exploratory apparatus by the end of the year, which will require a review of the price limits mechanisms.