Considered among the oldest markets in the region, Egypt’s capital market is a true image of the Egyptian economy with its changes and developments.

The capital market is seen as a source of funds that companies need to finance their production and service activities. As such, it represents a basic pillar for the growth of the economic process. Through this market, individuals and financial institutions invest their money with the purpose of obtaining medium- and long term returns. In return, companies and governments strive to re-invest such funds in new production and service projects and expansions.

As a result, capital is allocated more efficiently and effectively to projects which provide more job opportunities, contribute to increase of economic growth rates and raise the living standards of the public.

The capital market is divided into two main markets: the primary market and the secondary market. The primary (or issuing) market is the one where a security is issued and sold for the first time whether a company issues capital stocks upon is foundation and sells them to founders or investors or when new stocks are issued or sold after the foundation of the company to increase capital. Further the company can issue and sell bonds to investors. If securities are up for sale to investors in general, this sale is called “public offering”. If it is directed towards a certain group of investors, it is called “private placement”. The price at which a security is sold in the primary market is called the “issue price”. When a security is listed at the exchange and investors start selling and buying it with no involvement on the part of the issuing company into these transactions, and trading is transacted at a price different from the issue price, this price is called the “trading price” or “market price”, which is determined according to supply and demand for the security at the exchange. Trading at the exchange is called “secondary market” or “trading market”.

The securities market in Egypt dates back to the 19th Century, in 1888 to be exact, when Alexandria Exchange was established, followed by Cairo Exchange in 1903, which is currently called the Egyptian Exchange.

The number of listed companies in 1907 was 228 with a market capital of about L.E 91 million. We cannot forget that the Egyptian Exchange was considered the fifth most active exchange in the world during the Forties of the Twentieth Century. As a result of the nationalization of a number of Egyptian companies during the Sixties of that century, it went into a slowdown phase until the government started to apply a comprehensive program for economic reforms and privatization. In 1992, Capital Market Law issued, which, together with the subsequent regulations and decisions, opened the door again for revitalization of the Egyptian Exchange. Year after year, new activities and several institutions working in different fields in the capital market were introduced until the Egyptian capital market became among the strongest and deepest activities of the market in the region, with the most complete setting of legislative, institutional and technological structure, and the highest rate of compliance with international principles and standards governing capital markets. The number of activities and mechanisms organized by different legislations on the capital market is more than 16 different activities in 2010. By the end of 2010, there were more than 618 securities companies.