The main EGX30 index is heavily weighted toward a handful of large stocks which account for over half of its total value — and many of its smallest components are more illiquid.
Weightings of firms on the new EGX 20 Capped index, due to go live on Sunday, will reflect their free float, not the market value of their entire share capital, exchange spokesman Hicham Turk said.
To make it easier for mutual funds to comply with local financial rules, the index weighting of any single company will be capped at 10 percent, he said.
A popular uprising, economic turmoil and uncertainty over the outcome of planned elections have sent the EGX30 down 43 percent this year in thin trading.
“The new index aims at helping portfolio managers at investment funds,” the exchange’s chairman Mohamed Omran said.
Ashraf Al-Sharkawy, the head of financial market regulator EFSA, also said it would enforce a new rule that sets 100 million pounds as a stock’s minimum market capital to boost liquidity.
