CAIRO: The Egyptian Exchange (EGX) indexes rallied Monday and market capitalization gained 4.3 billion EGP ($602 million), getting support from the Cabinet’s decision to amend a capital gains tax on stock market profits announced last week.
Experts said the rebound was expected after the sharp plunge triggered by the government’s decision to impose a 10 percent annual tax on stock market profits, dividends and bonus shares.
The benchmark index EGX30 rose 1.54 percent to reach 8,015 points, up from Sunday’s close at 7,890. The small and mid-cap index EGX70 went up 0.5 percent to hit 563 points and the broader index EGX100 added 0.58 percent to reach 990 points.
Market capitalization added around 4.3 billion EGP to record 464.6 billion EGP, compared to 460.3 billion EGP Sunday. Turnover reached 1 billion EGP.
The Cabinet decided during a meeting late Sunday to amend a tax on stock market profits following an EGX slump since the tax was announced last week. The market recorded its biggest daily loss in almost a year on Sunday.
The EGX ended Sunday’s session on a sharp decline after recouping some early losses, and market capitalization lost more than 16 billion EGP.
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 meeting reached a number of amendments, first of which is that bonus shares will not be taxable with no need for a time-limit minimum to retain investors. Secondly, the amendment that the tax on dividends will be a minimum value of distributions at 15,000 EGP,” EGX chairman Mohammed Omran said in a Monday statement.
The head of the Technical Analysis Desk at Naeem Brokerage, Ibrahim El-Nemr, said the rebound was a normal reaction to the sharp decline over the tax news.
“Despite the rally, the market is likely to resume its downward correction once more if the benchmark fails to stay above 8,130 to 8,245 points,” Nemr told The Cairo Post. “The market is witnessing a corrective wave and could decline to 7,400 points in the short term.”