By: Heba El-Kordy
Cairo – Mubasher: The Egyptian Exchange (EGX) saw a mixed performance during 2018 and it was mostly impacted by some stocks.
These stocks were Global Telecom Holding (GTH), EFG Hermes, Sarwa Capital, Beltone Financial Holding, and the heavyweight Commercial International Bank (CIB).
GTH
GTH was the most negative stock, which in return impacted the EGX’s performance in 2018 due to the uncompleted acquisition offers by VEON Ltd that affect investor interest in the market.
VEON had canceled its mandatory purchase offer with GTH in April 2018, which weigh on the benchmark EGX30 index, pushing it to fall to 17,800 points after hitting record highs above 18,400 points.
This weighed on the EGX’s performance, especially after inflation rates rose again, which made investors gradually lose interest in trading, branch manager at Mubasher Financial Services (MFS) Safwat Abdel Naeem said.
GTH’s stock plunged by 50% since the beginning of 2018 as a result of the uncompleted offers.
EFG Hermes
The stock market manipulation case that occurred in mid-September also pressured the EGX along with the emerging markets’ crises.
In September, the Cairo Criminal Court ordered the arrest of ousted Egyptian President Hosni Mubarak’s two sons for violating the rules of the EGX and the Central Bank of Egypt (CBE) by making unlawful profits through dealing in Al Watany Bank of Egypt’s (AWB) shares.
Alaa and Gamal Mubarak, as well as other seven other men accused of stock market manipulation, denied any wrongdoing, Reuters reported at the time.
The current and former board members Yasser El Mallawany and Hassan Heikal, respectively, at Egyptian investment bank EFG Hermes were also detained.
The leading investment bank said it was not a part of the manipulation case.
The EGX lost around 550 points in one trading session following the arrest order, while market capitalisation hit its lowest in the year.
Sarwa Capital and Beltone
Sarwa Capital has sparked controversy since it was listed on the Egyptian bourse after regulators found out irregularities in the stock’s offering process amid the denial of the offering’s arranger, Beltone Holding.
The stock shed more than 11% in its debut on the EGX.
The EGX has seen a bearish trend since mid-October by nearly 5.5% as trading on Sarwa Capital commenced following the Financial Regulatory Authority’s (FRA) decision to halt Beltone from promoting and arranging initial public offerings (IPO).
Beltone’s stock plummeted by more than 46% since the beginning of 2018.
CIB and tax amendments
In December, the heavyweight CIB has fallen to lowest level in two years, which weighed on the EGX to fall near 12,000 points and hit its lowest level since February 2017.
Moreover, the banking sector index fell on the back of tax amendments on the yields of debt instruments.
In November, the Egyptian Ministry of Finance (MoF) announced it signed an agreement with the Federation of Egyptian Banks to implement the proposed tax amendments by the ministry immediately after being approved by the parliament.
Two weeks after the announcement of this decision, CIB’s stock retreated by more than 13%, pressuring the EGX30 index to lose over 1,000 points.
Egypt's largest listed lender expected its profits to fall by around 5% in 2019 due to the tax amendments.
Translated by: Mai Ezz El-Din
