CAIRO: The Egyptian Exchange indexes (EGX) dropped sharply Wednesday, hit by investors’ selling spree on the third day of the presidential election, following news about the government’s intention to mull a new tax on stock market profits.
Meanwhile, capital market experts and technical analysts said EGX30 re-tested support level at 8,500 points to 8,600 points. However, the index will probably rebound and penetrate the 9,000-point barrier if it manages to stay above the 8,600-point level in the short term, according to the analysts.
The benchmark index EGX30 slipped sharply 2.27 percent to hit 8,537 points down from 8,736 points Monday. Small and mid-cap EGX70 dropped 1.36 percent to hit 605 points and the broader EGX100 was also down 1.37 percent at 1,058 points.
Market capitalization lost a round of 6.2 billion EGP ($800 million) to reach 488.4 billion EGP, compared to 494.6 billion EGP Monday. Turnover reached 1.2 billion EGP.
Ihab Saeed, head of technical analysis at Osool ESB Securities, attributed the decline to reports that the Ministry of Finance is pushing for imposing a new tax on EGX profits, hindering indexes from off-setting their losses during the election.
Technical analyst Walid Helal said EGX penetrated the first support level at 8,600 points and approached the second at 8,500 points, which turned to be a new resistance level, and then rebounded to 8,537 points boosted by the market bellwether CIB.
The selling pressures started Monday despite expectations that the benchmark could continue its rally, backed by investor upbeat sentiment over the election, due to speculations and low turnout on voting.
EGX administration suspended its session Tuesday after the Cabinet announced an official vacation amid efforts to allow citizens to cast their votes.
“EGX30 could trim its losses and resume its rally on Thursday getting support from the initial estimates of election results tonight,” Helal told The Cairo Post.