Graduation project report

Project Title:
How market performance affect of Ipo’s volume at the market.

Abstract: This research seeks to know the impact of the performance of

the financial market on the volume of IPOs in the Egyptian market
represented by the volume of coverage of the Egyptian market for these
IPOs, because many studies have shown that a the need for financing is
not the main motive for public subscription. And the special financing
needs of companies due to encouraging the economic recovery taking
place in the country or the investor’s optimism to launch the public
offering. It has been proven in many researches that there is a significant
relationship between the stock market returns and the number and size of
initial subscriptions.

Search terminology:
1 - Market performance
2 - Ipo’s volume of market
 Introduction:

1: background to the project:

 Usually, and in most cases, there are daily fluctuations in the
financial markets periodically, and this affects the general
performance of the financial markets. It is difficult to predict
future values because it is affected and subject to external
factors, whether economic or financial, or to other factors
that affect the performance of the market in general.

 As we explained in a simple way that there are many factors

that affect the performance of the financial market, we will
mention some of them to clarify and prove that there are
always periodic fluctuations in the performance of the
markets.

Factors:
1- Supply and demand for stock market
2- Company related factors of stock market
3- Investor sentiment for stock market
4- Interest rates affecting stock market
5- Political factos affecting stock market
6- Current events that affect stock market
7- Natural calamities affecting stock market
8- Exchange rates affecting share price

Market performance and its measurement are of great

importance to the investor and influence his decision in the
market, helping him to avoid investments with high risks or to
invest in investments with high returns. The performance of the
financial market is measured by many measurements, the most
important of which is liquidity

Liquidity:
Stock market liquidity plays an important role on measuring
market growth and efficiency. Market liquidity is a market’s
ability to facilitate an asset being sold quickly without having
reduced price and it has a positive impact on stock market.
Stock market increases the firm’s performance and efficiency of
manager pay-for-performance sensitivity. Firms with liquid
stocks have better performance as measured by the market-to-
book ratio. The relationship between liquidity and performance
has received considerable attention in financial economics from
different perspectives.

ipo’s volume:
 An initial public offering (IPO) or stock launch is a public
offering in which shares of a company are sold to
institutional retail investors and usually also to
(individual) investors. An IPO is typically underwritten by
one or more investment banks, who also arrange for the
shares to be listed on one or more stock exchanges.
Through this process, colloquially known as floating, or
going public, a privately held company is transformed into
a public company. Initial public offerings can be used to
raise new equity capital for companies, to monetize the
investments of private shareholders such as company
founders or private equity investors, and to enable easy
 trading of existing holdings or future capital raising by
becoming publicly traded
 After the IPO, shares are traded freely in the open market
at what is known as the free float. Stock exchanges
stipulate a minimum free float both in absolute terms (the
total value as determined by the share price multiplied by
the number of shares sold to the public) and as a
proportion of the total share capital (i.e., the number of
shares sold to the public divided by the total shares
outstanding). Although IPO offers many benefits, there are
also significant costs involved, chiefly those associated
with the process such as banking and legal fees, and the
ongoing requirement to disclose important and sometimes
sensitive information.
 Details of the proposed offering are disclosed to potential
purchasers in the form of a lengthy document known as a
prospectus. Most companies undertake an IPO with the
assistance of an investment banking firm acting in the
capacity of an underwriter. Underwriters provide several
services, including help with correctly assessing the value
of shares (share price) and establishing a public market for
shares (initial sale).
 In this research, we trade IPOs as an astronomical size, so
that we can limit IPOs to the Egyptian market, and to
know the impact of the performance of the Egyptian
market on these IPOs, we must limit their size.
There are many factors that affect the size of these IPOs and
their trading volume in the Egyptian market
 The level of “investor interest” in an IPO prior to its
issuance affects the offer price, initial return and initial In
this research, we trade the IPOs as an volume so that we
can limit the IPOs to the Egyptian market and to know the
impact of the performance of the Egyptian market on the
IPO trading volume. After the issuance, this level of
interest affects the long-term trading volume of the shares,
which leads to a positive relationship between the initial
return of the IPO and its trading volume for more than
three years after the issuance. Using press references as an
indicator of the level of interest in a company, I find that
investor interest correlates positively with initial return,
initial trading volume, and long-term trading volume.
There are many factors that affect the size of these IPOs
and their trading volume in the Egyptian market:
Among these factors that affect IPOs, I can limit their
volume within the Egyptian market to know their
relationship and the impact of the market’s performance
on them

Research problem:
1) Although many researches have been carried out that
include the topics of financial market performance and
market liquidity and its impact on the volume of IPOs
in the market, this study aims to search for the gap of
these researches by answering the main question of the
research: What is the impact of the performance of the
financial market on the volume of IPOs and their
coverage in market?
2) After calculating and quantifying the liquidity in the
Egyptian financial markets, will you be able to cover
 the volume of IPOs offered in the Egyptian market in
these years and the period of time?
3) After calculating the size of the Egyptian market and its
liquidity and limiting them, if we find that the market is
not ready to bear the subscriptions and cover them, then
we are facing a real problem that must be considered in
this research