The Egyptian Exchange (EGX) started to take practical steps towards activating the first index that measures the performance of listed companies of the market for small and medium enterprises, NILEX.
EGX indices committee studied, during its last meeting held on the 23rd of January, the launch of NILEX Index choosing from different methodologies.
Dr. Mohammed Omran, EGX Chairman, noted that the launch of this new index comes within the continuous efforts of developing the market and its financial instruments as well as its indicators. This is to increase its competitiveness in order to meet investors? appetite via providing the necessary tools to measure the market performance. EGX chairman added that launching of Nilex Index aims at activating NILEX after changing its trading mechanism from auction system to the normal trading mechanism at the end of 2011. This also comes after increasing the trading hours from one hour to four hours trading at the beginning of October 2013 aiming at increasing the market liquidity and attracting investors to NILEX as one of the promising markets in Egypt as well as being the first market of its kind in the Arab region.
The new index uses the methodology of the market cap adjusted by free float, which is the same methodology used for the main index EGX 30, but the nature of NILEX imposed a number of changes on this methodology. the most active companies are selected in terms of value during the audit period, excluding companies that have free float less than 10%, as well as the ones that experience recurrence violations of disclosure rules( more than 3 violations ), and the companies that conclude losses for a period of three consecutive years.
Based on the methodology, there is no certain number of companies required to constitute Nilex Index which differs from the EGX30 stock index. It also does not require the company to achieve more than 50% of the trading days.
The new index began to be counted beginning of July 2, 2012, after a six-month period of changing the trading mechanism from the auction mechanism to the normal trading mechanism at the level of 1000 points. It has achieved an increase of 15.7% by the end of 2013 to close at 1156.8 points compared to an estimated growth of 37% on the EGX 30 Index during the same period.
Worth mentioning that the decision to extend NILEX trading hours from one hour to 4 hours in 3 October 2013, has had a significant impact on growth of NILEX index where it concluded a growth of 18.3% during the period from 3 October to December 31, 2013 , compared to a yield on the EGX 30 Index is estimated at 18.9% during the same period.
