By Doaa Farid
Atef El-Sherif, the head of the bourse, said the recent delisting of a number of leading stocks will not negatively affect the market.
The management of the stock market decided on Monday to implement changes to major stock indexes starting from 1 August, and delist six companies from EGX30. The EGX70 index delisted 14 companies, five of which joined the benchmark EGX30.
The most prominent change is the exit of Egypt’s largest-listed company, Orascom Construction Industries (OCI), from the benchmark EGX30 index, after the Netherlands based global nitrogen fertiliser producer OCI NV, successfully acquired 97.44% ownership on Sunday.
El-Sherif explained that this is a “normal measure” that occurs every six months, adding that membership rules governing companies that join the EGX30 benchmark index “aim to enforce governance principles and limit risks.”
A company is licensed for operation in the stock market by the Capital Market Authority (CMA) according to these rules and if the company fails to adhere to a single rule, it will be delisted, El-Sherif explained.
“The license to perform in the EGX 30 is granted according to the company’s financial and technical potential, the experience of the company’s managers and employees, early detection and warning against the risks resulting from different activities,” El-Sherif added.
He addressed concerns over the possible negative effect on the stock market as a result of the delisting of OCI, whose shares represent around 10-15% of the market, saying: “The relative weight of OCI shares is distributed, and it may equal the relative weight of shares of another companies, so it won’t affect anything” he said.
In addition to Orascom Construction Industries, the delisted companies from EGX30 are Raya, Egyptian for Tourism Resorts (EGTS), Citadel Captial (CCAP), Alshams Company (ELSH) and the National Real Estate Bank for Development (NRPD).