File Photo: A general view of the Egyptian stock exchange in Cairo
The Egypt Stock Exchange (EGX) has started to recover, regaining close to EGP 20 billion of its capital market losses over the past week amid the global COVID-19 outbreak crisis.
The EGX recovery came on the back of the initiative that the National Bank of Egypt (NBE) and Banque du Caire launched at the end of last week that pumped EGP 3 billion into the EGX to offset its losses and improve its performance.
By close of session Sunday, the EGX 30 saw an upward rise of 5.92 percent to reach 9,751 points, the EGX 30 rose by 3.5 percent, while the EGX 100 rose by 4.27 percent.
Sunday's performance was dominated by Egyptian purchases at a net total of EGP 11,639 billion, foreigners’ recording EGP 1,173 billion, while Arabs recorded only EGP 42,952 million.
Corporates purchases held the lion's share at 97.16 percent, while individual purchases declined to 2.83 percent.
Gross selling among foreigners reached EGP 10,278 billion.
Commenting on the EGX's performance, head of research at SHUAA Securities Amr El-Alfy told Ahram Online that the stock market has started to respond to measures adopted over the past week to energise the market.
El-Alfy added that the response to the NBE and Banque du Caire move was high, while other procedures have not had the same impact because of global fear of COVID-19 that has driven foreigners to sell over the past week and during Sunday’s session.
“The NBE and Banque du Caire have announced that they could increase their allocations for investing in the EGX if necessary, and that has raised confidence in our market and helped it have some breathing space,” he said.
However, financial markets expert Mohamed Deshnawy expected that the EGX will not be able to continue surging, citing that purchasing operations have been driven by Egyptian corporations against a selling wave dominated by foreign corporations.
“National banks took a wrong decision by pumping investment into the EGX at the current time as global challenges, including the COVID-19 outbreak threat, are becoming increasingly worse. I expect that the EGX will return to a downward trend, albeit at a reduced rate,” Deshnawy said.
The EGX lost EGP 162.225 billion from its capital market since the beginning of March amid the COVID-19 outbreak.
In the past week, the government announced a catalytic package, including measures reducing brokerage commissions and financial market listing fees, and fees of bourse operations by 17 percent, and decreasing fees introduced by Misr for Central Clearing, Depository & Registry Company by 20 percent with maximum of EGP 5,000, or equivalent in hard currency.
Egypt’s cabinet approved also a package to boost the Egypt Stock Exchange, including reducing the stamp tax for foreign investors from EGP 1.5 to EGP 1.25 per EGP 1,000, until the implementation of a capital gains tax starting 2022.
It has also exempted immediate stock transactions from any stamp tax, to boost trading, and exempted foreign investors from the capital gains tax, postponing implementation for local investors to January 2022.