Experts explain why the Egyptian Stock Exchange lost $1.7 billion in 3 trading days

The Egyptian Stock Exchange witnessed a weak performance during the past three sessions, as it lost 27 billion pounds ($ 1.7 billion) in market value, as the main index, EX 30, fell 175 points to close at 11,403 at Monday’s close.
Analysts attributed the losses to the imposition of capital gains taxes on the stock exchanges, the lack of approval of the amendments agreed upon by the government and money market representatives, and the recent stock offering that fell on the stock exchanges below the issue price, in addition to the impact. Political tensions in Ukraine on the performance of financial markets, which led to the reluctance of foreign investors to invest.

The financial market expert, Dr. Mutasim Al-Shahidi, said that the stock market’s decline during the past three sessions was the result of a group of factors, including the impact of the financial markets surrounding political tensions in Ukraine, which affected the purchase by international buyers. Investors in Egypt – the last offer on the stock exchange – were priced below the offering price, which affected the number of investors and the market’s liquidity decreased significantly, which was reflected in the small and increasing “margin demand” operations due to the decline in stock prices. Medium company.

Shares of Macro Group Pharmaceuticals, which started trading on the Egyptian Stock Exchange last Thursday, fell at 4.85 pounds ($0.309) per share, during the past three sessions, to close at 4 pounds ($0.25) on Monday.

Regarding the impact of the Ukrainian political tensions on the Egyptian Stock Exchange, Al-Shaheedy explained in a statement that the financial markets interact with each other, so any event that affects the global financial markets will be reflected locally, except for the case. With huge sums of money, investment funds can support the Egyptian financial markets in times of decline, and seize the opportunity to buy shares listed in the market that have reached attractive prices.

Mutasem Al-Shahidi suggested several decisions to improve the future performance of the Egyptian capital market, most notably increasing the volume of insurance fund investments in the stock market, giving incentives to increase the number of investment funds, and promoting in addition to providing a better investment. In the Egyptian capital market, in addition to the large number of government companies to attract new traders and new liquidity, they provide incentives to attract foreigners.

EGX Chairman Dr. Mohamed Farid had announced earlier that he intended to hold a meeting with officials of the Social Security Office in the coming period to discuss increasing the bureau’s investments in the Egyptian capital market, and he had previously held this meeting. A similar meeting. Meet with Post to discuss the same document.
Shawkat El Maraghy, a member of the Egyptian Stock Exchange’s board of directors, believes that the Egyptian capital market’s losses in the past days are due to the non-imposition of capital gains tax on stock exchange traders by amending the income tax law. Related to collection in addition to some shares, she added that the process of “margin call” after the sharp decline forced brokerages to sell shares to investors to repay loans to buy shares, adding that these reasons greatly affected the weak trading volumes and lower stock prices.
Egypt imposed a capital gains tax of 10% on stock exchange investors in 2014, which at that time caused turmoil in the Egyptian capital market over how to calculate it, forcing the government to postpone three times until the final decision was made last November, with the professional . Association representing the stock market: negotiating funds, implementing a new capital gains tax mechanism, both in terms of collecting and calculating tax rates, while exempting domestic investors from stamp duties.

Al-Maraghi ruled out, in a statement, the impact of the Ukrainian political tensions on the performance of the Egyptian Stock Exchange, as the performance of the financial markets has been below par since October, and foreign institutions are reluctant to join despite the stock prices. Which is considered attractive to buy, and the high growth rate of the Egyptian economy expected by international agencies, but he pointed out that the repercussions of the stock market’s performance had a negative impact on individual investors who made up the largest percentage of market transactions.

According to the government statement, the Global Fox economic institution monitors the expectations of 30 research institutions for the Egyptian economy, with growth expectations ranging between 4.2% and 6%, and Goldman Sachs was the most optimistic, as institutions recommended an average price growth of 4.9%. and 8.7% between.

Shawkat El-Maraghi stressed that the abolition of the capital gains tax on the Egyptian Stock Exchange can help improve the performance of the market, adding in this regard that it is difficult to take a decision to abolish the tax because it will require legislative amendments, but such a tax has affected the continued confiscation of the Egyptian capital market on the competitiveness of the capital market The Egyptian market compared to neighboring markets, which affected the attractiveness of foreign institutions and investment funds.

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