Investment Terms and Definitions

Kazem Ramadan
Modified on: Mon, 21 Mar, 2022 at 12:55 PM

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EGX: Egypt's stock exchange, comprises two exchanges, Cairo and Alexandria, both governed by the same board of directors and sharing the same trading, clearing and settlement systems.


Market Index: A market index is a metric that tracks the performance of a group of stocks. It is designed to track the overall performance of a market, and will be measured in points. An example of this is EGX30.


Market Capitalization: The amount of money you would have to pay if you bought every single share of stock in a company - Share Price * Number of Shares. For example, a company with 10 million shares selling at EGP 5 a share would have a market cap of EGP 50 million.


Share Price: Price of company’s stock based on the last transaction - Supply and demand driven - different from book value per share.


Beta: A measurement of the relationship between the price of a stock and the movement of the whole market. If a stock has a beta of 1.3, that means that for every 1 point move in the market, the stock moves 1.3 points, and vice versa.


Earnings per Share (EPS): Earnings per share or EPS is a financial measure which indicates the profitability of a company. It is calculated by dividing the company’s net profit over its total number of outstanding shares.


Dividend Yield: Measure of the return on an investment that is received from the payment of a dividend. This is determined by dividing the annual dividend amount by the price paid for the stock. If you bought a stock for EGP 10 per share and it pays an annual dividend of EGP 1 per share, you have a yield of 10%.


52 Week High/Low: Highest and lowest share price points during the last 52 weeks.


Portfolio Value: Your portfolio value is the value of all of the assets that you own on your thndr account.


Cash Balance: Your cash balance is the amount of cash you have available in your thndr account that you can use towards buying new stocks.


Stock Market: It is a place where shares of publicly listed companies are traded. It is where one investor buys shares from another investor at the prevailing market price or at whatever price both the buyer and seller agree on.


Shares/Stocks: A stock is a type of investment that represents an ownership share in a company. When an investor buys a company’s stock, they’re purchasing a small piece of that company, called a share. For companies, issuing stock is a way to raise money. For investors, stocks are a way to grow their money.


Dividend: A portion of a company’s earnings that is paid to shareholders, or people that own that company’s stock. Not all companies pay dividends.


Bull Market: When the stock market is in an upward trend, or a period of increasing stock prices. This is the opposite of a bear market. If a stock price goes up, it’s bullish.


Bear Market: When the stock market is in a downward trend, or a period of falling stock prices. This is the opposite of a bull market. If a stock price drops, it’s bearish.


Liquidity: Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market - measured by traded value and volume.


Custodian: A custodian is a financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. A custodian holds securities and other assets in electronic or physical form.


Market Data: In finance, market data is price and trade-related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders and investors to know the latest price and see historical trends for instruments such as equities, fixed-income products, derivatives and currencies.


Financial Ratios: Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by comparing information contained in its financial statements. Ratio analysis is a cornerstone of fundamental analysis.


Fundamental Analysis: Fundamental analysis attempts to measure a security's fair value by examining related economic and financial factors including the balance sheet, strategic initiatives, microeconomic indicators, and consumer behavior


Technical Analysis: A trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Technical analysts focus on patterns of price movements, trading signals and various other analytical charting tools to evaluate a security's strength or weakness.


Analyst Consensus: The average of different analysts' estimates about a stock's or security's performance (earnings, recommendations, etc..)


Target Pricing: A price target is the projected future price level of an stock by an investment analyst or adviser. The price target is based on assumptions about the stock’s future prospects, technical levels, and fundamentals.


Initial Public Offering (IPO): An IPO is the first sale or offering of a stock by a company to the public. It happens when a company decides to go public rather than remain solely owned by private investors.


Bid/Best Bid: The highest price a buyer is willing to pay for a stock or asset.


Ask/Best Ask: The lowest price a seller is willing to sell a stock or asset.


Bid Volume: The volume of shares available at best bid price.


Ask Volume: The volume of shares available at best ask price.


Market Order: Place a bid or an ask at the prevailing market price.


Limit Order: Place a bid or an ask at a specific price point of your choice.


Good for Day Expiry: Place an order that will expire at the end of the trading session. If the order isn't fulfilled by the 

end of the trading sessions, it will get cancelled.


EGX 30 : The EGX 30 Index is a free-float capitalization weighted index of the 30 most highly capitalized and liquid stocks traded on the Egyptian Exchange. Liquidity is the most important criteria for selecting the constituents or companies that comprise EGX 30 Index.


EGX 70: This index tracks the performance of the 70 active companies in terms of liquidity and activity, after excluding the 30 most active constituent-companies of EGX 30 Index. EGX 70 index measures the change in the companies' closing prices, without being weighted by the market capitalization and does not take into account the free float.


EGX 100: This index tracks the performance of the top 100 active companies, including both the 30 constituent-companies of EGX 30 and the 70 constituent-companies of EGX 70. EGX 100 index measures the change in the companies' closing prices, without being weighted by the market capitalization and does not take into account the free float.


Income Statement: The Income Statement, or P&L, is one of a company’s financial statements that shows their profit over a period of time. The profit - also referred to as net income, net earnings or the bottom line - is determined by taking all revenues and subtracting all expenses.


Balance Sheet: A balance sheet is a statement of the financial position of a company that provides a snapshot of the assets, liabilities, and shareholder's equity. In other words, the balance sheet illustrates a company’s net worth.


Price-to-Earnings Ratio (P/E): The price to earnings ratio or P/E is the measure of the share price relative to the annual net profit earned by the company per share. It is calculated by dividing the company’s market cap over its net profit for the year. P/E ratio shows current investor demand, A high relative ratio might indicate increased demand or that the stock is expensive.


Blue Chip Stocks: The stocks behind large, industry-leading companies. Blue chip stocks usually have a consistent performance record and have a reputation of sound management.


Spread: This is the difference between the bid and ask prices of a stock, or the amount for which someone is willing to buy it and the amount for which someone is willing to sell it. For instance, if a Seller is willing to sell a stock for EGP 5 and a buyer is willing to buy for EGP 3, the spread is EGP 2.


Short Selling: When you short-sell a stock, you borrow shares from someone else with the promise to return them at a point down the road. You then sell the stock for a profit. It’s a way to take advantage of a stock that you believe will decrease in price. After you sell short, you can buy back the shares at the lower price point and take the difference in price as your profit.


Capital Gains Tax: Capital gains tax is payable when a capital asset (eg. stock) is sold, and a gain is realized. The rate in Egypt is 22.5%. However, this specific tax is currently waived for an indefinite period - meaning that it is effectively 0% in Egypt.


FRA: The Financial Regulatory Authority (FRA) is responsible for supervising and regulating non-banking financial markets and instruments, including Capital Market, Futures Exchanges, Insurance Activities, Mortgage Finance, Financial Leasing, Factoring, and Securitization. FRA plays a pivotal role in ensuring stability and soundness of these markets and boosting their competitiveness to attract further domestic and foreign investments. FRA also works on reducing risks resulting from the lack of coordination, in addition to addressing problems emanating from the presence of different regulatory methods.


MCDR: Misr for Central Clearing, Depository and Registry (MCDR) is a private company that handles the clearing and settlement operations and acts as the Central Depository for all securities in Egypt. The main shareholders of MCDR are EGX, banks, and member firms.


Member Firm/Broker: A member firm is licensed by the Egyptian Financial Regulatory Authority to trade on EGX. They act as agents by buying and selling securities on behalf of investors, since investors are not allowed to trade directly to the EGX trading system. They also provide advice to their customers based on their in house research capabilities.


GDR: Global Depository Receipts (GDRs) are negotiable certificates that usually represent a company’s publicly traded equity. They are also considered as an equity substitute for the local shares that can be used to list on a foreign stock exchange e.g. London, Luxembourg, New York etc.

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