Tax Gains On NSGB Takeover Deal Drags EGX 30 Below 5130 Pts

During Tuesday’s closing, the Egyptian Exchange (EGX) has extended its midday losses to eventually reach EGP 5.45 billion driven the taxes imposed on on shareholders and investment funds that make capital gains from the acquisition deal of National Société Générale Bank (NSGB) by Qatar National Bank (QNB).

The capital market has reached to EGP 357.524 billion during Tuesday’s closing session.

The Egyptian Tax Authority (ETA) will impose tax on shareholders and investment funds that make capital gains from the acquisition deal of National Société Générale Bank (NSGB.CA) by Qatar National Bank (QNB), said ETA chairman Mamdouh Omar announced on Tuesday.

Egypt’s benchmark index EGX30 dived by 1.95% to close at 5129.09 p; while EGX20 sank by 2.27% to end at 5976.84 p.

Meanwhile, the mid- and small-cap index, the EGX70 pushed down by 1.58% to conclude at 447.83 pts.  Price index EGX100 tumbled by 2.11% to finish at 744.51 p.

During Tuesday’s closing, the trading volume hit 75.218 million securities, less than Monday’s 65.300 million securities, representing an increase of 9.918 thousand securities. For the traded value, it reached EGP 226.204 million, exchanged 15.055 thousand transactions.

This was after trading in 169 listed securities; 136 declined, 8 advanced; while 25 keeping their previous levels.

Driven by the news of imposing tax on the NSGB’s takeover deal, the non-Arab foreigners were net sellers seizing 26.95% of the total markets, with a net equity of EGP 20.621 million excluding the deals.

Meanwhile, Egyptian and Arab investors were net buyers seizing 67.97% and 5.07% respectively, of the total markets, with a net equity of EGP 9.295 million and EGP 11.326 million excluding the deals.

Tax Gains On NSGB’s Acquisition Deal:

Société Générale will be exempted from taxes for the transaction under an agreement to avoid double taxation between Egypt and France, but individual shareholders and investment funds holding minority stakes in NSGB will have to pay a 10% tax on their gains, as per article no. 56 (bis) of law no. 91 of 2005.

The Central Bank of Egypt (CBE) has approved QNB’s request to acquire 100% of NSGB. The offer values the bank at US$ 2.558 billion.

The EGX’s management stated that the total shares offered for sale as regard to the National Société Générale Bank (NSGB)’s takeover deal are 432.183.782 million securities.