CAIRO: The Egyptian Exchange (EGX) indexes plunged Sunday and market capitalization shed nearly 16 billion EGP ($2.23 billion), amid intense selling pressures triggered by the government’s decision to impose a new tax on capital gains.
The benchmark index EGX30 fell 4.22 percent to close at 7,894 points. The EGX management decided to suspend Sunday trading for half an hour after the index plummeted 5.72 percent to 7,771 points in early trading.
The small and mid-cap index EGX70 dropped 4.88 percent to hit 560 points and the broader EGX100 dropped 4.42 percent to 985 points.
Market capitalization lost nearly 16 billion EGP ($2.2 billion) to record 460.3 billion EGP, down from 476.3 billion EGP Thursday. Turnover reached 871.58 million EGP.
This is the first time the market has suspended trading since the January 25 Revolution, and the EGX administration took this precaution as the indexes exceeded the maximum limit of decline at 5 percent.
Ibrahim El-Nemr, head of the Technical Analysis Desk at Naeem Brokerage, attributed the plunge to investor concerns that the market could decline sharply over the tax news.
“The EGX witnessed its worst performance since June 2012, and the benchmark dropped to its lowest close since April 15, 2014. Meanwhile, the market managed to trim its loss after trading was resumed, and the EGX30 is likely to edge up during Monday’s early trading,” Nemr told The Cairo Post.
The market is witnessing a corrective wave and could decline to 7,400 points in the short term, hovering between 7,350-7,700 points, while the resistance level ranges between 8,250-8,800 points.
Last week, market capitalization lost around 21.6 billion EGP due to an investor selling spree following the tax news that coincided with the presidential election, and the expected landslide victory of ex-army chief Abdel Fatah al-Sisi in the presidential election. Unofficial numbers show he has received over 90 percent of total votes.
The benchmark index EGX30 dipped 5.55 percent to end the week at 8,243 points, lower than the 8,727 points it finished at the week prior.