2024-04-24 21:14:51
Cairo, Egypt (CNN) — The Egyptian Stock Exchange experienced negative performance over the past few days, with the main index falling 3,750 points to the level of 25,917 points, and the market capitalization losing 235 billion pounds ($4.9 billion ) in a week, falling to the lowest level. of 2,000 billion pounds..
Experts attribute the reasons for this sharp decline to geopolitical tensions in the Middle East region, and the tendency of traders, especially local institutions, to reap profits following the sharp rise in the financial market over the past two years, and forced sales of “Margin Call Stocks” increased the severity of declines following losses in investors’ portfolios..
Deputy Chairman of the Board of Directors of Mubasher Capital Holding Company for Financial Investments, Ihab Rashad, said: “The huge losses that the stock market has experienced since last Thursday’s trading session, following many news negative, began with the emergence of news regarding the start of the implementation of the collection of capital gains tax for investors in the financial market, followed by an increasing pace “Geopolitical tensions in the Middle East region, which led to losses in investors’ portfolios and prompted brokerage firms to act forcefully.” sell (margin call) their clients’ shares, which exacerbated the decline..
The Egyptian Stock Exchange lost more than 88 billion pounds ($1.8 billion) of its market value during Thursday’s trading session, following reports circulated that the Ministry of Finance and Misr Clearing Company, responsible for settling securities transactions in the country. Egyptian market, to collect capital gains tax from investors..
Rashad added, in statements to CNN Arab, that “the losses that occurred following the announcement of the start of the implementation of the collection of a capital gains tax among dealers might lead to a study on deferral of the collection of this tax”, adding that “it would have been better to apply the stamp duty to Egyptian stock traders in the same way as to foreigners to achieve “tax justice”..
In a statement, the Ministry of Finance denied press reports claiming its intention to collect tax on capital gains from investors in stocks and bonds on the stock market within two months, stressing that There is no requirement for investors to submit a capital gains tax return on publicly traded stocks and bonds. restricted titles..
Ihab Rashad ruled out that foreign investors’ confidence would be affected by the suspension of some business operations due to the power outage at the stock settlement company, adding that this incident is “temporary and will not happen once more.” “I believe the state will take steps to exclude Misr Clearing Company from the load reduction plan, while providing the company with backup sources of electricity in the event of a power outage to ensure service stability. “.
During last Monday’s session, some trading operations on the stock exchange were affected by a power outage at the company Misr Clearing, which is responsible for settling transactions in the financial market. Immediately following the service arrived, a large number of Arab and foreign investors rushed in. to sell shares..
Rashad expects the stock market to recover in the coming period and the main index to rise, but without reaching its previous levels above the 30,000 point level, as the stock market is experiencing a decline trading during the summer months and the lack of strong incentives that push investors to increase the volume of their investments in the financial market..
The main index of the Stock Exchange closed this week at the level of 25,917 points following falling by 3.21% during Wednesday’s session, which was the last due to the “Liberation of Sinai” holiday on Thursday, reducing the index’s profits to 4.11.%.
Rania Yaqoub, a member of the board of directors of the Stock Exchange and president of Three Way Securities Trading Company, attributed the reason for the decline in stock indicators to the strong selling of local institutions to reap profits following a rise that lasted more than two years, and the tendency of these institutions to seek safer investment alternatives such as Treasury bonds, which reflects a strong demand from foreign investors, excluding geopolitical tensions from having a significant impact on the stock market performance.
The recent period has seen strong demand from foreign investors to buy Egyptian government treasury bonds following raising interest rates by 600 basis points, and Egypt reached an agreement with the International Monetary Fund to increase the value of the loan granted to $8 billion..
Yacoub added, in statements to CNN Arab, that the real estate, construction materials and banking sectors recorded significant declines in recent days, and that these declines were exacerbated by the forced sale of client actions, “margin calls” and led to increased selling pressure on Egyptian indices..
Rania Yaqoub agrees with Ihab Rashad that the power outage will not affect the confidence of foreign investors, pointing to similar incidents seen in large companies as well as financial markets in the recent period. She also agrees with him that there is no problem. new tax on stock market transactions, explaining that capital gains tax was previously postponed for two years and was supposed to start collecting them in the current month, but so far the mechanism of collection has not been settled..
The Egyptian Parliament previously approved amendments to the income tax law, which provided for a capital gains tax reduction of 10% on 50% of capital gains realized on the sale shares of listed companies, which would be reduced to 25% two years following the amendments. were approved, with the aim of encouraging IPOs..
Rania Yaqoub advised traders to maintain liquidity, avoid random purchases and open marginal positions during the current period, and move towards rapid trading operations, which she said are ” most appropriate in the event of violent fluctuations..
The Managing Director of Alpha Financial Investment Management Company, Mohamed Hassan, said that geopolitical tensions in the Middle East region are the main reason for the sharp decline in stock indices over the past period, in addition to others factors, including profit-taking operations by traders following the sharp rise in the stock market over the past two years, and news regarding the start of the implementation of capital gains tax collection..
Hassan added, in statements to CNN Arab, that all sectors were negatively affected by the wave of decline in the stock market, especially since the forced sale of stocks significantly increased the pace of decline over the three recent sessions, expecting the stock market to move. downward in the short term, provided that it resumes its upward path at the beginning of June or July..
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