Stock Market Launches New Index “EGX 70 EWI”

The Egyptian Stock Exchange will launch on Sunday a new equal-weighted index "EGX70 EWI".

The index will measure the performance of the best 70 companies in the stock market in terms of liquidity and value after excluding the companies that make up the "EGX30" and canceling the current index "EGX70".

The Stock Exchange said in a statement that the launch of the new index is in line with the best international practices in the field of managing stock market indexes.

The new index, which is a substitute for the EGX70 will come into effect starting Jan. 2 at a value of 1000 points. Each company listed on the“ EGX 70 EWI” index will receive the same relative weight, which is about 1.43% in the first days of the periodic review.

According to the statement, the committee of the Egyptian Stock Exchange approved the amendment and the new methodology of listing companies in the “EGX70 EWI” and “EGX50 EWI” indexes as of Aug. 2020.

The management stated that during the modification process of the EGX30 index methodology, it took into account the inclusion of companies that achieve high trading values ​​on a monthly basis instead of considering the total trading values ​​at the end of the review period every 6 months, which could include joining companies that achieve spikes in trading values ​​but not continuously.

Mohamed Farid, Chairman of the Egyptian Stock Exchange said that the methodology for calculating the new index is one of the approaches followed by many international institutions that reflect the performance of the companies, reflecting their price performance ratio.

The new index provides the possibility of introducing financial products such as index funds, as the new index is a good tool that investment institutions can target to issue investment funds. Also, tracker funds can play an important role in building a perse portfolio. The new index also goes in line with the requirements of workers in the market, especially the fund managers.

Farid stated that the EGX70 EWI helps enhancing the opportunities for growth and development of the mutual funds industry by persifying the investment options and enabling them to accurately measure the performance of their portfolios.