THE PERFORMANCE of the Cairo and Alexandria Stock Exchange (CASE) was mixed during 2006, although it was more subdued in comparison to the upheavals of 2005. CASE30 ended the year with an eight per cent gain, a marginal increase compared to the whopping 150 per cent gain it realised in 2005, which at the time ranked it on top of all emerging markets worldwide. While January witnessed an overactive market with the CASE30 exceeding the 8000 threshold, February was bad news. In a domino-like effect, a correction in neighbouring Gulf markets pushed Arab investors to pull out of the local bourse, causing a selling frenzy that weighed down on the local market. Another factor which put pressure on CASE30 was the influence of increased US federal interest rates on the decisions by emerging markets portfolio managers, who found emerging markets less appealing than the returns on dollar investments. The market swung further between corrections and slides until the end of June when the index settled as low as 4685 points. The exceptionally high bid which the UAE-based Etisalat made to acquire the third mobile license was like a vote of confidence in the economy, a move that stirred a revival in the market that continued until the end of the year. 2006 also witnessed the introduction of new trading techniques such as intra-day trading, which some people partially blamed for the decline in the market. As for the short selling mechanism, it never saw daylight despite several announcements that it will be enforced in early July. Online trading was a big hit by the end of the year, with five brokerages acquiring license for electronic bidding and many more waiting to follow suit. Companies working in capital market activities witnessed many changes, including a general trend towards forming larger institutions. The UAE's Abraaj Capital bought a 20 per cent share of Egypt's largest investment bank EFG Hermes. Naguib Sawiris together with Dynamic Securities formed a new investment company, while Naeem Holding -- an investment bank with a majority stake held by Saudi investors -- tapped the market. Both EFG Hermes and Primes Securities sought licenses to provide services in the UAE, while EFG Hermes was granted a license to work in Saudi Arabia. CASE issued the Dow Jones Titan index, which tracks the performance of 20 local blue chips, to give portfolio managers.