EGX launches four sub-indices to measure overall performance of government bonds

The Egyptian Stock Exchange (EGX) launched four sub-indices to measure and track the performance of Egyptian treasury bonds, which are listed and traded on the exchange according to different maturity periods, during today’s trading session.

The session was inaugurated by Minister of Finance Mohamed Maait; his deputy, Ahmed Kojak; representatives of the securities industry; Mohamed Farid, the Chairperson of the EGX; his deputy, Ahmed Al-Sheikh; several EGX leaders; as well as other officials from the CBE and the settlement company owned by it and the ministry.

This came after the EGX’s Indicators Committee adopted the new sub-indices methodology to complement the efforts to develop indicators for measuring the performance of traded securities.

This will provide investment products of these indicators and enhance the diversity of investment products available to meet the needs of all categories of investors.

The measure is in line with the best international practices in the field of developing and managing stock exchange indices.

The indices include the most traded bonds, while the market value of the security determines the weight of each issuance within the index. The index takes into account both the yield resulting from the change in bond prices and the yield resulting from the coupons due, which reflects the total return for the performance of the government bonds that make up the index.

The step is integrated with the comprehensive vision adopted and implemented by the EGX to develop and raise the efficiency of the government bond market, enhance its liquidity, activate its trading, and help create an active secondary market that helps the Egyptian government access financing at a competitive cost.

Maait said that the ambitious programme adopted and implemented by the EGX to develop the market for listed government treasury bonds traded in the exchange is integrated with the efforts of the ministry and its action plans, which aim to prolong the term of debt instruments.

The terms are expected to reach three to seven years by the end of this fiscal year, instead of 1.3 years. This is expected to relieve the pressure on the public treasury. Moreover, the new indicators developed and launched by the EGX are expected to contribute to raising the efficiency of the treasury bond pricing process and enhancing its circulation.

The minister added that the government is very enthusiastic about completing and activating the programme to expand the ownership base of state-owned companies through the stock market, revealing that new government proposals will be revealed before the end of this fiscal year.

For his part, Farid said that developing new indices — whether the general index or sub-indices that reflect the different maturities of bonds — aims to raise the efficiency of the process of tracking and measuring the overall performance of government bonds and thus enhance the vision and investment attractiveness.

It can also support efforts to enhance liquidity market trading and reinforce the diversification of investment options before all current and potential investors.

“The process of developing indices is in line with the proposals of those working in the market — especially investment managers — regarding the importance of a reference indicator that tracks the performance of treasury bonds, as it would promote their documents, while bond indicators help with developing new financial products, as the index is a good tool that financial institutions can target to issue investment traded funds,” he added.