The Egyptian Exchange (EGX) will on Sunday launch the EGX100 Equal Weight Index (EWI) replacing EGX100. The new index measures the performance of the best 100 companies on the EGX in terms of liquidity and activity including EGX30 and EGX70 EWI constituents.
The new index divisor has been calculated at 1,000 points starting from 2 January 2006. All listed stocks on the EGX100 EWI will have an equal weight, which is about 1% on the first day of the periodic review.
The EGX indicators committee has also approved some modifications to the listing methodology for companies that make up the EGX100 EWI, EGX70 EWI, and EGX50 EWI indexes, similar to the benchmark index EGX30, are to be implemented as of August 2020.
When developing the EGX30, the EGX management took into account the inclusion of companies that achieve high trading values on a monthly basis instead of total trading values at the end of the review period every six months, which could include companies with trading values spikes, but not constantly.
EGX Chairperson Mohamed Farid said that the methodology for calculating the new index is one of the approaches followed by many international institutions that issue indicators that reflect the performance of the companies that make up the index that is more reflective of their price performance.
The new index provides the possibility of creating financial products such as index funds, as the new index is a good tool that investment institutions can target in order to issue investment funds that follow the Index Tracking.
He added that the new index helps enhance the opportunities for growth and development of the investment funds industry by diversifying investment options and enabling them to accurately measure the performance of their portfolios that target the index.
The EGX management held a dialogue with all the actors of the market about the new index, which concluded that the market needs a new index of equal weights, and the EGX completed the requirements of the technical structure and index tests on the electronic trading system, necessary for its final launch scheduled for Sunday 10 May, according to the statement.