Amwal Al Ghad English - 2013-04-13 12:40:47
According to a recent report released by the global leader in business intelligence Oxford Business Group, the stock market in Egypt got off to a bullish start in 2013, but political deadlock, ongoing unrest across the country, a rising government budget deficit, foreign reserve losses and currency depreciation have all seen the Egyptian Exchange (EGX) struggle in recent weeks. A recent government decision to impose a tax on all EGX transactions is likely to contribute to continued unstable performance.
The market reached a three-week high on February 5, but the main EGX30 Index fell 1.8% the following day and has not recovered since. The week of February 18, the total value of shares for companies listed on the EGX dropped EGP 5.5bn ($816m), and the benchmark index fell to 5627 points. Since February 21, the EGX30 has fallen 80.5 points, exacerbated by investor concerns over the country’s inability to secure a $4.8bn loan agreed by the IMF. Egypt signed a preliminary deal for the loan with the institution last November, but delayed final agreement fearing a backlash among its people against austerity policies in the run-up to a referendum on the new constitution.
Despite the EGX30’s January show of resilience, the index remains nearly 1000 points below its closing mark two years ago on the eve of the uprising that ousted President Hosni Mubarak. Pre-revolution the index breached 6000.
A recent decision to impose a 0.001% tax on all EGX trades could make investors even more cautious. The tax, part of a modified economic program to shore up the budget deficit in the hopes of obtaining the IMF loan, is accompanied by increases in sales taxes on several commodities and fuel price hikes for energy-intensive industries. More»