NASDAQ Dubai has agreed today with Egypt’s securities clearing house to promote cross-listings of Egyptian firms’ shares in Dubai, a sign of growing investment links between the two economies.
The Share trading in Dubai as well as Cairo will give issuers greater access to international investors.
The deal between NASDAQ Dubai, the smaller of Dubai’s two stock exchanges, and Misr for Central Clearing, Depository and Registry (MCDR) establishes technical ties that will facilitate dual listings, the two bodies said on Thursday.
In a release published on Thursday, MCDR’s chairman Mohamed Soliman Abdel Salam said the agreement would also encourage portfolio investment flows from the United Arab Emirates into Egyptian markets, by allowing UAE investors to clear their trades via NASDAQ Dubai.
“This will reduce risk for investors,” Salam told reporters, estimating that UAE investment in Egypt’s stock market now totalled about 14 billion Egyptian pounds ($2 billion). The market has a capitalisation of around $72 billion.
Hamed Ali, NASDAQ Dubai’s chief executive, said a number of Egyptian companies had expressed interest in the idea of dual listings to increase their access to cash-rich Gulf investors and raise their profile in the region.
He declined to comment on specifics, but Amsterdam-listed OCI, controlled by Egypt’s billionaire Sawiris family, said on Thursday it planned to spin off its construction and engineering business and list it on stock markets in Egypt and the UAE in the first quarter of 2015.
UAE investors’ interest in Egypt has been increasing since Islamist President Mohamed Mursi was overthrown by the army last year, prompting the UAE and other Gulf states to provide billions of dollars of aid to Cairo.
Salam said MCDR was also exploring the possibility of a deal to promote dual listings with the Abu Dhabi Securities Exchange.
Commercial International Bank, Egypt’s biggest listed bank, obtained a cross-listing in Abu Dhabi about a decade ago but subsequently delisted after there was minimal trade in its shares, which Salam attributed to a lack of publicity.
NASDAQ Dubai is also looking for more tie-ups with a couple of exchanges outside the Middle East, Ali said. He did not elaborate.