Cairo - Mubasher: The market capital of the Egyptian Exchange (EGX) lost around EGP 24 billion since government remarks regarding imposing a stamp duty tax on the capital market trade emerged.
In February, the benchmark index EGX30 lost 5.8% or 734.8 points, and closed at the level of 11,937.67 points, seeing its biggest decline since June 2016.
Traded values on the stocks of the main index totalled EGP 18.55 billion with a volume of 4.3 million share.
The EGX70 index added 0.94% or 4.4 points and closed the month at 473.36 points, with a total turnover of EGP 3.1 billion and a volume of 622 million shares.
The broader index EGX100 slipped 1.48% to 1,140.77 points, while the equal-weighted index EGX50 declined by 2.2% to 1,862.8 points.
The market capital closed at EGP 588.8 billion, compared to EGP 612.8 billion in January.
Portfolio manager at Horizon Security Brokerage Bahaa Abdelnaby said that the EGX30 level ranged between 13,000 and 13,500 points since the beginning of 2017, on the back of foreign investments which increased after the Egyptian pound's flotation in November 2016, noting that liberalising exchange rates is the beginning for economic reform and stability in Egypt.
Abdelnaby added that the market was negatively affected after the EGX30 was targeting the level of 13,500 points, explaining that it is normal for profit-making trade to appear after reaching a record high, which pushed the main index to the level of 12,500 points.
The market did not bounce back due to some obstacles in the Egyptian capital market, with the application of a stamp duty tax on the stock market trade having a negative impact, as it does not encourage and support investments, resulting in foreign and Arab investors leaning towards selling, according to Abdelnaby.
The financial expert also said that the timing of Banque du Caire’s offering led to the majority of funds exiting the market to subscribe in the first initial public offering (IPO) for a public bank.
The main index is expected to target the support level of 11,800, as the market rebounces to nearby levels, Abdelnaby indicated, forecasting EGX30 to target levels between 14,500 and 16,000 points by the second quarter of the current year.
Last Monday, the chairman of the Egyptian Tax Authority, Emad Samy, revealed that the authority has conducted a study regarding applying the stamp duty tax to the stock market trade that reached the rate of 0.175% on both the buyer and seller.
