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Egypt stocks slump on tax plans, Abu Dhabi falls

The Egyptian Exchange halted stock trading for half an hour Sunday morning because of an unusually sharp move in the market, it said. (REUTERS/Mohamed Abd El Ghany)

CAIRO: Egypt’s benchmark EGX 30 Index fell the most in a year after the government said it was preparing a levy on investor profits. Abu Dhabi’s measure also retreated.Egypt’s gauge dropped 5 percent to 7,832.37 as of 1:28 p.m. in Cairo. Trading was halted for 30 minutes after the broader EGX 100 Index slid 5 percent. About 563 million Egyptian pounds ($79 million) of stocks traded, compared with a one-year full-day average of 593 million pounds. Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, led declines with a 2.6 percent retreat. Abu Dhabi’s ADX General Index fell from an eight-year high reached on May 29.

Stocks in the North African country have tumbled 11 percent over the past four days amid plans for the tax and as investors collected profits on former army chief Abdel-Fattah al-Sisi winning the presidency. The government submitted a draft law Sunday for ratification, calling for a 10 percent tax on net realized portfolio profits and cash dividends, according to a bourse statement.

“The market is panicking, especially retail investors that have made substantial profits,” Mohammad Ebeid, head of brokerage at EFG-Hermes Holding SAE, said by phone from Cairo. “This tax will have a long-term impact, especially on companies that are considering initial public offerings.”

The Abu Dhabi Securities Market General Index declined 1.8 percent in the final trading session before the United Arab Emirates and Qatar are upgraded to emerging markets status by index provider MSCI Inc. National Bank of Abu Dhabi PJSC dropped 6.7 percent, the most since December 2009, to 16.1 dirhams ($4.38).

Dubai’s DFM General Index, the world’s best-performing gauge this year among more than 90 tracked by Bloomberg, slid 0.6 percent. Emaar Properties PJSC, the developer of the world’s tallest tower, retreated 3.8 percent after its malls unit raised a $1.5 billion Islamic loan from local banks ahead of a planned IPO this year.

Many UAE and Qatar stocks are overpriced, Mark Mobius, who oversees about $50 billion as executive chairman of Templeton Emerging Market Group, said in comments published by Abu Dhabi’s The National newspaper Sunday. Abu Dhabi’s index is trading at 14.3-times estimated earnings for 2014, while gauges in Dubai and Qatar are at 18-times and 14.7-times respectively, data compiled by Bloomberg show. That compares with 10.6-times for the MSCI emerging markets measure.

Saudi Arabia’s Tadawul All Share Index rose 0.5 percent and Qatar’s QE Index was little changed. Oman’s gauge advanced 0.5 percent, Kuwait’s added 0.4 percent and Bahrain’s measure climbed 0.1 percent.

Israel’s benchmark TA-25 index advanced 0.2 percent to 1,395.85, while the yield on the benchmark 3.75 percent bond due 2024 added three basis points to 2.93 percent.

 
A version of this article appeared in the print edition of The Daily Star on June 02, 2014, on page 5.

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Summary

Egypt's benchmark EGX 30 Index fell the most in a year after the government said it was preparing a levy on investor profits.

The Abu Dhabi Securities Market General Index declined 1.8 percent in the final trading session before the United Arab Emirates and Qatar are upgraded to emerging markets status by index provider MSCI Inc. National Bank of Abu Dhabi PJSC dropped 6.7 percent, the most since December 2009, to 16.1 dirhams ($4.38).

Abu Dhabi's index is trading at 14.3-times estimated earnings for 2014, while gauges in Dubai and Qatar are at 18-times and 14.7-times respectively, data compiled by Bloomberg show.

Saudi Arabia's Tadawul All Share Index rose 0.5 percent and Qatar's QE Index was little changed.

Israel's benchmark TA-25 index advanced 0.2 percent to 1,395.85, while the yield on the benchmark 3.75 percent bond due 2024 added three basis points to 2.93 percent.


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