CAIRO: The Egyptian Exchange indexes (EGX) plummeted Thursday, hurt by an investor selling spree following a government decision to mull a 10 percent annual capital gains tax on stock market profits, cash dividends and bonus shares.
This was despite early indicators that Abdel Fatah al-Sisi had won the presidential election held from Monday to Wednesday.
The benchmark index EGX30 slipped sharply 3.45 percent to hit 8,242 points, down from 8,537 points Wednesday. The small and mid-cap EGX70 dropped 2.63 percent to hit 589 points and the broader EGX100 was also down 2.61 percent to 1,030 points.
Market capitalization lost 12.1 billion EGP ($377.6 million) to reach 476.3 billion EGP, compared to 488.4 billion EGP Wednesday. Turnover reached 1.6 billion EGP.
Ihab Saeed, head of technical analysis at Osool ESB Securities, attributed the decline to the proposed tax on EGX profits and cash dividends, which he said hindered indexes from offsetting their losses during the election.
Saeed was particularly critical of the tax proposal, because he said it offsets recent government attempts to attract new investments in the EGX. “This will hurt EGX competitiveness among the neighboring Gulf markets,” he said.
Pressure to sell started Monday despite expectations that the benchmark could continue its rally, backed by upbeat investor sentiment over the election.
The EGX administration suspended its session Tuesday after the Cabinet announced an official vacation amid efforts to allow citizens to cast their votes.
The EGX experienced a sharp decline Wednesday, and the EGX30 dropped 2.27 percent to hit 8,537 points, down from 8,736 points Monday. The 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 6.2 billion EGP.