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