The performance of the stock market has certainly turned a few heads in recent months. Flotation of the currency in January 2003 proved the boost investors needed as the economy started to emerge from its five-year downturn. By the end of September this year, the broad-based Hermes Financial Index (HFI) had risen by 95 per cent from the same period in 2003, while average daily turnover for the month reached £E 170 million. Since it was appointed in June, the new government has sent out signals that have continued to galvanise stock prices, from the wholesale restructuring of the customs regime in early September to the announcement of proposed tax cuts and the privatisation of state assets in the banking sector (see box).

'The performance of the market since the appointment of the new cabinet has been extraordinary, and we are witnessing volumes and values of trading we haven't seen since 1996 or 1997,' says Shawky. 'They are taking very aggressive steps to reform, and the fact that they give the impression of taking decisions collectively has almost more of an effect on the market than the decisions themselves.

'One sign that it's not just the sentiment among local investors is that there are many more foreign financial institutions involved, particularly from the Gulf. The attraction is that our market is much deeper than many others - we have about 600 companies listed, and our investor base is much wider than other markets in the region.'

The groundwork for the current run of success was laid some time ago, but the reform of CASE itself continues apace. Between 2000 and 2003, the Foreign Trade Ministry and Capital Markets Authority (CMA) have been working to introduce international corporate governance practices in Cairo, particularly with regard to disclosure of financial data. Companies are rewarded for their compliance with the removal of trading limits on corporate stocks. Within the stock exchange itself, an equally strong emphasis has been placed on upgrading infrastructure.

'The exchange has really been revitalised since the first major reforms in the 1990s, when they introduced an electronic trading system and established a clearing and settlement company,' says Shawky. 'This is the reform path we are following at the moment, and after upgrading infrastructure - linking the platform here with the one in Alexandria, our plan now is to connect the trading system live to the clearing and settlement system.

'Assuming this is successful, in the short term we will be ready to implement two new financial tools to enable margin trading and short-selling. Our main aim is to increase liquidity, and to provide what we consider to be the first basic hedging instrument in the local securities market.'

Under the aegis of the newly created Investment Ministry, which now oversees all non-banking financial matters, the CMA has reopened discussions with four other regional market regulators to set up a cross-border financial platform. Based in Cairo, it would enable trading in some of the largest and most active stocks listed on the Egyptian, Jordanian, Lebanese, Kuwaiti and Omani bourses.

'At the moment we are drafting the delisting and listing rules for the pan-Arab platform, as well as the membership rules for companies who will be eligible to act as brokers,' says Shawky. 'Egypt will manage the clearing and settlements, as well as providing the trading engine for this pan-Arab stock exchange.'

This long-term project is part of a broader liberalisation of the Egyptian securities market, including the launch in