The Egyptian Stock Exchange continues to bleed losses .. and experts comment

Cairo, Egypt (CNN) – The Egyptian Stock Exchange saw a negative performance during June as the main index fell by 23.18% since the beginning of the year, with market capitalization of £ 145.5 billion (7.8). billion dollars) lost. , amid weak trading that did not exceed one billion pounds in any session during this month.

Financial market analysts attributed the reasons for this decline to intense foreign sales due to high interest rates worldwide, which led to the withdrawal of foreign investors from government debt instruments and the Egyptian capital market, as well as the continuation of capital gains tax.

Ehab Saeed, a former member of the Egyptian Stock Exchange and an expert on financial markets, said the sales of foreign investors were behind the sharp decline in the Egyptian Stock Exchange in recent days, especially the leading shares in foreign investments. concentrated, which attributes the reason for the intense foreign sales to the continued rise in interest rates in the United States European and Gulf countries, which led to the exodus of foreign investment from Egypt, whether investing in debt instruments or in the stock market. .

Foreign investors recorded a net sale on the Egyptian Stock Exchange, which has been £ 9.9 billion ($ 528.4 million) since the beginning of the year, with foreigners owning 18.8% of the total trading value of listed shares .

In exclusive statements to CNN in Arabic, Saeed pointed out that the decision to set the interest rate in Egypt for the first time in history had a negative impact on the Egyptian stock market, which explains why central banks around the world tended to to increase interest rates. rate to counter inflation, led by the US Federal Reserve.On the other hand, the Central Bank decided The Egyptian government fixed interest rates, and therefore investment in Egypt did not become attractive to foreign investors, whether in debt instruments or in the stock market , in view of the high interest rates in the United States.

The Central Bank of Egypt raised interest rates by 3% in the March and May meetings, before deciding on the interest rate at the last meeting on 23 June at the level of 11.25% for deposits and 12.25% for to determine lending.

Ihab Saeed added that the Egyptian government’s failure to announce any executive action regarding the capital gains tax levied on investors in the stock exchange or the list of government offerings contributed to the deepening of the stock’s losses, adding that some stock exchange traders recently received tax claims. for tax-excluded financial instruments, which increased Investors’ concerns.

The Egyptian government has held a large number of meetings during the last period to discuss the file of the government proposal program, the last of which was last week, and has decided to update the expected government proposal program and agree that procedures and economic conditions dates control. of the proposals, according to a statement.

The financial market analyst has identified the most prominent stocks that have suffered sharp losses in recent days, namely Commercial International Bank (Egypt), Financial Group Hermes Holding, Fawry for banking technology and electronic payments, which are the most prominent leading stocks. which leads the main index of the Egyptian Stock Exchange.

Ehab Saeed believes that the Egyptian Stock Exchange has declined due to the economic situation the country is experiencing as it faces major challenges which are reflected in the performance of the capital market.This reform is reflected in the stock exchange.

Saeed said the most important decisions needed to stop the losses of the Egyptian Stock Exchange are the abolition of the capital gains tax, which has become financially useless in light of the losses that traders make in the stock exchange during the current period. and therefore its postponement will not affect the outcome of the state’s general budget, on the other hand it will positively affect On the government proposals program that the state intends to implement.

Egypt has applied the capital gains tax to the stock market since the beginning of this year, after the deadline for its postponement expired. The acquisition price or the closing price of the shares before the start of implementation, whichever is higher compared to the sale. price, and the amendment to the Income Tax Act has already begun, but these amendments have not yet been approved.

Hanan Ramses, an expert on financial markets, said that intense foreign sales had led to losses in recent days, and attributed the reason for these sales to the issuance of confused decisions by the money market regulators, in addition to the trend of investment funds to sell shares that bear cash dividends or shares to avoid tax and retain liquidity to re-enter the market after the completion of the distributions, which requires the abolition of capital gains tax.

In exclusive statements to CNN in Arabic, Ramses demanded that the Egyptian government work to understand the requirements of foreign investors to invest in a stable capital market without administrative confusion, such as issuing decisions to prevent codes trading floats without explaining the reasons and canceling purchases on some shares, the most recent of which was a decision to stop Hafiz Bank in Egypt for the first time.

The Financial Supervisory Authority has decided to suspend the activity of the custodian at Attijariwafa Bank-Egypt for a period of 30 days, in accordance with the provisions of Section 69 of the Central Depository Regulation and Register of Securities Act.

Hanan Ramses pointed to the low trading value on the Egyptian Stock Exchange, which reached an average of 400 million pounds, which negatively affected the performance of the brokerage firms, which counted 200, of which the largest 10 companies the largest percentage of transactions, which put small brokerage firms under pressure and force them to reduce commission to retain clients, and stocks fell to low levels and reached their prices during the Corona virus pandemic.

The financial market expert stressed that the solution is to improve the performance of the Egyptian Stock Exchange by changing the management responsible for the capital market file by choosing new leaders who are aware of the role of investment as a platform for low-cost financing and attract new investments, in addition to drawing up a timetable for the plan of government offerings.

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