ï»?The Egyptian Exchange is one of the oldest stock markets established in the Middle East. The Egyptian Exchange traces its origins to 1883 when the Alexandria Stock Exchange was established, followed by the Cairo Stock Exchange in 1903.
The Egyptian Exchange (EGX)
- Alexandria Stock Exchange
During the 19th century, ALEXANDRIA's FUTURES MARKET was one of the oldest in the world. The first local recorded cotton transaction took place in 1885 in Alexandria's Caf?A© de l'Europe on Place des Consuls which was later renamed Mohammed Ali Square. It was there that cotton merchants met and cut deals based on supply and demand for the long staple Karnak and Menouf or the short to medium staple Ashmouni, Giza and Zagora. Over the years, deals extended to cotton seed varieties such as Hull, Afifi and Sakellaridis.
The first cotton deal-makers eagerly waited for the weekly arrival of the news-sheets from Europe to guide future operations. Reputation counted for everything. Cotton growers who delivered on time were courted by exporters and received large orders the following season. Timing and reliability was of the essence if profits were to be made.
From Caf?A© de l'Europe cotton deal-makers moved to a nearby building and as business grew, the Association Cottoniere d'Alexandrie (later the Alexandria General Produce Association or AGPA) was created for the purpose of trading in cotton, cotton seeds and cereals in the spot and future markets.
In 1899, during the reign of Khedive Abbas Hilmi II, AGPA moved to an imposing new building, henceforth called The Bourse on Mohammed Ali Square. The Alexandria Bourse became a city landmark featuring in postcards, books and city guides. In more ways than one, the bourse became the focal point of the city's financial community. The Association's old premises meanwhile, was transformed into a bank, and later on into the Top Hat night club.
Cotton forward contracts were legalized in 1909 to coincide with Egyp
t's recovery from a massive economic slump brought on by the financial crash of 1907 when banking and real estate institutions collapsed due to excessive speculation. So far, government intervention had been practically absent. On the other hand, the spot market of Minet al-Bassal was left alone until 1931.
Of the 35 registered cotton brokers in 1950, only two were Egyptians. Likewise, the directors of the Alexandria bourse were an uneven mixture of Egyptians, Levantine and Jews. Its veteran president was a Syrian, Jules Klat Bey. Despite its ethnic mixture AGPA had come a long way from when Britons controlled it through two of Alexandria's largest cotton exporters, the Carver and the Moss families. And when a Carver scion married the Moss heiress, they held an even stronger grip on this lucrative export market. Similarly, cotton ginning mills were controlled in great part by foreigners. Foremost among them last century were Selig Kusel from Manchester, the Plantas from Liverpool, the Lindemann's from Prague and Dresden, and the Choremi-Benachi-Savagos representing the Greek Connection.
Up until the 1950's most of the trading was done with the Liverpool Cotton Exchange evidencing Egypt's strong ties with the waning British Empire. Not unlike oil today, Egyptian cotton trade had invariably been politicized during the inter-war period figuring as a clause in most of Egypt's international agreements. It was a major bargaining tool as well as a collateral for Egypt's currency. The powerful Manchester trade relied heavily on this staple which was responsible for untold fortunes made in the UK.
There were also the Joint Egyptian Cotton Committee and the Cotton Institute, two highly respected institutions affiliated with the International Cotton Congress. With time, more and more Egyptians entered the trade once the jealously guarded preserve of the Finneys, the Rheinharts, the Rolos, the Cicurels and Pintos. Newcomers included Talaat Harb Pasha, a founder of the Banque
Misr group of companies, and Mohammed Farghaly Pasha, president of the Alexandria Cotton Exporters Association. On the expert side, there was Ahmed Abdel Wahab Pasha, a former minister of finance, and Fouad Abaza Pasha the director of the Royal Agricultural Society.
Just as the native intelligentsia was to have its turn at the helm, agricultural trade was brought within the aegis of the state through a series of 1950s agrarian reform laws. Henceforth, the agricultural sector mutated into unprofitable small holdings and bureaucratic cooperatives.
- Cairo Stock exchange
During one of their informal turn of the century meetings at the Caf?A© New Bar, Cairo's merchants and brokers were reminded once more by their leader, Monsieur Maurice Cattaui, that the time had come for Cairo to follow Alexandria's example and have its own Bourse. With the number of limited liability companies reaching 79 at an aggregate capital of 29 million pounds, the city's taipans could no longer conduct pork barrel politics on Cairo's sidewalks or inside coffee shops and hotels. And so it was when on Thursday, 21 May 1903, an ad hoc site committee presi ded by Maurice Cattaui Bey, chose the old premises of the Ottoman Bank (today Groppi-Adly Branch) on Maghraby Street as the elected but temporary official headquarters of the newly incorporated Bourse and Banking Company of Egypt Limited . a.k.a. Bourse Khediviale du Caire.
With ambitious plans in mind, the new company leased the premises for a non-renewable period of six years at an annual rent of 400 Egyptian pounds. In the meantime, an international competition was initiated for the design of a dedicated bourse to be situated at the center of Cairo's European district, not far from the National Bank of Egypt (today Central Bank).
The prize for best design went in April 1907 to the French award-winning architect Raoul Brandon (designer of the Cairo Orosdi-Back department store). The timing couldn't have been better, or so ev
eryone thought. Emboldened by success and drunk on growth, the promoters of the Cairo bourse were in an excessive mood. It was public knowledge that when lumped together, the Cairo and Alexandria Bourses rated among the world's top five Stock Exchanges. Egypt's economy was at an all-time high and the number of companies traded in the Cairo Bourse alone had reached 228 with a combined capital of 91 million pounds. Seventy-three brokers and intermediaries were on hand to take care of the spiraling share trading. The modest premises on Maghraby Street had most certainly outlived its usefulness. It was time for swank.
But like the swing of a pendulum, the high state of euphoria disappeared overnight. Prudence having given way to high-risk speculation, what had started out with a real estate boom in Egypt, ended in what became known in the annals of speculative history as the Crash of 1907.
Some historians concede that the money panic of 1907 started in Alexandria, Egypt, with the failure in July of a large bank - Cassa di Sconto. Japan was hit next, then Germany, then Chile. By October, the fallout reached Europe and the United States. In Egypt, the overextended banks folded up one after the other. As share prices plummeted, soon enough, a by now jobless broker, Mr. Alfred Nahman, was appointed chief liquidator of the Bourse and Banking Company of Egypt Limited.
Eighteen months after Brandon's publicized award to build the Bourse that never was, the Corporation of Agents de Change commissioned the Cairo firm of Edward Matasek and Maurice J. Cattaui with the participation of Ernest Jaspar, to design and erect an Exchange Building.
Adorned with Matasek's trademark accouterments of Hermes masonic busts and ornate stucco, the resultant edifice was the handsomest building on the block. At long last Cairo had a real trading floor, surrounded by a high gallery from where share trading could be observed by the concerned public. The building, which stands opposite the French
consulate, was occupied in turn by Lloyds Bank, the British Chamber of Commerce, the National Bank of Egypt and now by the Watany Development Bank.
Trading had hardly started on April 30th, 1909 at Sharia al-Borsa al-Gedida or New Bourse Street when it was announced that Egypt's leading laissez-faire banker-industrialist, Raphael Suares , had died. The bourse closed for the rest of the day. It was largely thanks to his efforts that Cairo had had a bourse in the first place. In view of his untimely death, Suares missed by a few months, the imposition of the first ever bourse regulations.
It was in 1928, a year before the Wall Street crash, that the Cairo Bourse moved into its present premises on Sherifein Street. The art nouveau building with its multiple neo-Doric colonnades was designed by French architect George Parcq who was responsible for much of Cairo's elegant buildings including Sednaoui's department store on Midan Khazindar. Serendipity or not, the site on which Sednaoui was built had once been the first meeting place for Cairo's speculative traders prior to the formation of Cairo's first the bourse.
Since he had already died in 1924 Monsieur Moise Cattaui, the original promoter of the Cairo Bourse, had no way of knowing that four years after his departure the bourse would relocate on part of what had once been his Cairo palace. In its heyday, Palais Cattaui extended from the National Bank of Egypt all the way to Midan Soliman Pasha (now Talaat Harb). As though a reminder for his capital efforts, the Cairo Bourse is to this day flanked by two side streets, one of them named after Moussa Cattaui Pasha.
Before it folded up in July 1961 following the state-sanctioned demise of Egypt's private sector, the Cairo & Alexandria Bourses (they had already merged) wa s listed fourth in the world.
Almost thirty-six years later, in a new era of economic re-structuring, it is now up to the Tigers on the Nile to restore the Cairo Bourse to its former ranking.
e founding members in 1903: Maurice Cattaui Bey president, Arbib, Cookson, Gennaropoulo, Oziol, McGillivray. Adolphe Cattaui (rep. Courtier en Marchandises) and A.K. Reid (rep Courtier en Valeurs) plus representative each from Credit Lyonnais, Bank of Egypt, Imperial Ottoman Bank, Anglo-Egyptian Bank and the National Bank of Egypt. ).
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