In Week, Egypt Shares Gain EGP10.3 billion as Sisi Becomes New President

In a week which witnessed announcing ex-army chief’s official as Egypt’s new president, the stocks gain 10.3 billion Egyptian pounds.

The main stock index, EGX30 climbed by 3.1% throughout trading sessions of last week, registering an increase of 255.7 points, ending Thursday’s transactions at 8498.65 points compared to 8242.94 points at the end of a week earlier. The index was back to green bolstered by declaring a new head of state, easing the newly-imposed capital gains tax in addition to the news revealing an ambitious takeover plan for one of the biggest investment bank in the Middle East.

The main gauge index registered its highest point on Thursday closing at 8498.65 points, whereas its lowest point recorded on Tuesday at 7963.37 points.

In addition, the mid- and small-cap index, the EGX70 inched up by 1.6% closing at 599.24 points during Thursday’s session, compared to 589.5 points at the end of a week earlier. The price index, EGX100 also pushed up by 1.7% concluding by 1047.93 points during Thursday’s session, against 1030.85 points at the end of a week earlier.

Furthermore, the market capitalization closed at EGP 486.599 billion last Thursday, compared to EGP 476.29 billion at the end of a week earlier.

Turnovers & Traded Volumes:

Through the week, the trading volume hit around 1.5 billion securities, compared to 1.3 billion securities at the end of a week earlier. For the traded value, it reached EGP 6.1 billion against EGP 5.9 billion a week earlier.

Sectors Activity:

Financial Services excluding Banks sector was the most active sector through last week, recording a volume of trades of 492.2 million securities worth EGP 1.22 billion.

Telecommunications sector came second, attaining a volume of trades of 485.8 million securities worth EGP 827.5 million.

Real Estate reported third, with a volume of trades of 160.8 million securities worth EGP 977.6 million.

Travel & Leisure sector was on the fourth position, getting a volume of trades of 152.3 million securities worth EGP 310.2 million.

Industrial Goods and Services and Automobiles came fifth, recording a volume of trades of 73.5 million securities worth EGP 190.8 million.

Personal and Household Products sector reported sixth, having a volume of trades of 65.4 million securities worth EGP 282.9 million.

Construction and Materials was on the seventh position, with a volume of trades of 45.9 million securities worth EGP 233 million.

Food and Beverage reported eighth, attaining a volume of trades of 21.9 million securities worth EGP 91.6 billion.

Banks took the ninth position, with a volume of trades of 9.9 million securities worth EGP 317.7 million.

Basic Resources reported tenth, recording a volume of trades of 8.4 million securities worth EGP 119 million.

Chemicals ranked eleventh, attaining a volume of trades of 5.3 million securities worth EGP 76.1 million.

At the bottom of the list, Healthcare and Pharmaceuticals sector reported twelfth getting a volume of trades of 3.4 million securities worth EGP 21.2 million.

Investors’ Activity:

Local investors led the market activity all through the week with 85.40%, followed by foreign and Arab investors with 9.05% and 5.55%, respectively, after excluding the deals.

Foreign investors were the most active buyers during the week earning the value of EGP 110.79 million, after excluding the deals.

Arab investors were to sell by value of EGP 2.27 million, after excluding the deals.

Moreover, institutions seized 46.76% of total trading through the week; while individuals attained 53.24%. Institutions were the most active buyers during the week earning the value of EGP 62.15 million, after excluding the deals.

Market Remarks

–        Egypt Waters down Stock Market Tax

Egypt watered down a capital gains tax on stock market profits it announced last week, after the country’s bourse recorded its biggest daily drop in almost a year on Sunday.

Finance Minister Hany Dimian announced the new tax on dividends and share market transactions on Thursday, when the main index closed down 3.5 %. After the two-day market break, it fell a further 4.2 percent on Sunday.

The finance ministry had initially set a tax-free limit of 10,000 Egyptian pounds ($1,400) on annual cash dividend payments for individuals resident in Egypt.
Financial Supervisory Authority head Sherif Samy told Reuters late on Sunday the tax threshold would be raised to 15,000 pounds.
Egypt will exempt dividends paid in shares from the 10-percent gains tax.

–      IMF Defends Egypt’s ‘Well Targeted and Fair’ New Capital Gains Tax

On Monday, the International Monetary Fund defended in a statement Egypt’s decision to tax investor profits and the interim prime minister said he won’t reverse the plan even after it caused stocks to plunge.

“The new tax measures proposed by the Ministry of Finance are well targeted and fair,” Chris Jarvis, IMF Mission Chief for Egypt, said in a statement. “Solving Egypt’s budget problems requires tax increases as well as subsidy cuts. Taxing high income earners, including by taxing gains from capital, can make an important contribution and benefit all Egyptians.”

  –        Smart Villages Co. Deters IPO Plans amid Egypt’s New Capital Gain Tax

Also on Monday, in response to the newly proposed government tax on capital gains, Egypt’s Smart Villages Co. decided to delay IPO plans for some of its shares in local stock market.

Egypt’s Smart Villages Co. deterred to make its final decision on launch of an initial public offering for some of its shares in the Egyptian Exchange (EGX). This comes after the Egyptian government announced a capital gains tax on stock market profits, seeking to find additional sources of revenue after more than three years of economic and political turmoil since a popular uprising ousted Hosni Mubarak in 2011.

–      Egypt’s Beltone Offers to buy 20% Stake in EFG-Hermes

On Thursday, the board of Egypt’s Beltone Financial, (BTFH.CA), one of Egypt’s leading financial institutions, and a group of investors including Egyptian billionaire Naguib Sawiris submitted a voluntary tender offer to market regulator for 20% stake, or 114.7 million shares in the biggest investment bank in the Middle East EFG-Hermes (HRHO.CA).

“The deal value is at EGP 1.835 bln with a price of EGP 16 per share,” Beltone said in a statement, adding that the stake will comprises local shares and/or GDRs. Beltone’s stake in the tender offer will represent 1.1% of the total shares in the target company.
Such a deal to buy a major stake in EFG-Hermes would be seen as a sign of revival in Egypt’s equity market after years of depressed activity since the 2011 revolution.

–      EGX: Trading to be Halted Next Sunday Celebrating Sisi’s Inauguration

Egyptian Stock Exchange Administration declared Sunday, June 8th, 2014 as an official vacation on the occasion of the inauguration of the Egyptian new President Abdel Fattah al-Sisi.

The EGX further stated that trading sessions will be resumed on Monday, June 9th, 2014.