EGX 30 vs EGX 70 vs EGX 100

The term EGX stands for Egyptian Exchange and is the only registered securities exchange in Egypt. According to their official website, “the EGX is the trading venue whereby member firms or brokers could buy/sell securities electronically, on behalf of their customers or investors.” But what’s the difference between EGX 30, EGX 70 and EGX 100?

Source: Bloomberg

What is an index?

If you’re a subscriber, you’ve probably came across the terms S&P 500, DAX, or EGX30 but you might be still wondering what an index is. Stock market indices are a method of tracking the performance of a specific group or “basket” of stocks representing a particular industry or sector. Interestingly, indices date back to the late 1800s. Today, there are millions of indices covering almost every sector of the US and global economies. Indices are used to track narrow slices of the stock market (e.g., EGX 30, the Dow Jones Industrial Average (DJIA)) or represent a broad swath of global stock markets (e.g., MSCI Emerging Market). With 1,383 constituents, the MSCI Emerging Market covers approximately 85% of the free float-adjusted market capitalization in each country. It is worth noting that indices do not only track stocks but track almost every asset class from bonds to real estate.

EGX 30

The EGX 30 includes the 30 most active and liquid stocks which generally represent the biggest players in the market. It was established in January 1998 with a base value of 1,000 points. As of the 22nd of September 2020, the EGX 30 stands at approx. 11,000 points. Unlike the EGX 70 and EGX 100, the EGX 30 is a market capitalization weighted index. The index methodology requires that the market capitalization of the index is adjusted by free float. Free float are shares that are publicly available to shareholders and not restricted to private investors, government or other controlling-interest investors. Interestingly, profitability is not a must for a company to be included in the EGX 30. This is not the case in other major indices such as the S&P 500. To be eligible for inclusion in the S&P 500, the sum a company’s trailing four consecutive quarters’ earnings must be positive. For more information about the companies in the EGX 30, see this article.

Market Capitalization = Total Number Of Shares Outstanding * Price Of One Share

EGX 70 and EGX 100

As implied by the name, the EGX 70 tracks the performance of 70 active stocks, after excluding the most-active stocks in the EGX 30 and the EGX 100 combines the constituents of EGX 30 and EGX 70. Both indices are price weighted indices. This means that they only account for the company’s closing price without taking into consideration market capitalization or free float. The EGX 70 was introduced on the 1st of March 2009 with a base date of 02/01/2008 and a base value of 1000 points. The EGX 100 was introduced shortly after -August 2009- and was retroactively computed as of 1 January 2006.

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