Egypt stocks surge on OCI tax settlement

Ahram Online, Thursday 2 May 2013

News of Egypt's largest company tax dispute settlement drove index up, despite failure of EFG Hermes-QInvest merger deal

Egyptian stock exchange
Traders work at the Egyptian stock exchange in Cairo (Photo: Reuters)

Egypt stocks rallied significantly as the benchmark EGX30 index gained 1.54 percent to reach 5,276 points on news of Orascom Construction Industries (OCI) tax dispute settlement with the Egyptian government.

OCI, Egypt's largest listed company, announced on Tuesday that it had agreed to pay LE7.1 billion (approx. $1 billion) to the government, which accused it of evading $2 billion of taxes on the 2007 sale of its subsidiary Orascom Building Materials Holding (OBMH) to cement giant Lafarge on Egypt’s stock exchange.

OCI led the 107 gaining stocks on Tuesday, jumping 3.10 percent, while blue chip Commercial International Bank (CIB) gained 1.8 percent, and Orascom Telecom Holding (OT) rose 0.64 percent.

The real estate sector performed well, with Six of October Development & Investment (SODIC) gaining 1.6 percent, Palm Hills Development Company rising 0.46 percent, and TMG Holding gaining 1.01 percent.

Egyptian Financial Group-Hermes Holding Company fell 1.71 percent, after Egypt's financial regulator refused to approve the Cairo-based investment bank's merger deal with Qatar's QInvest.

Domestic investors were the net buyers on Thursday, to the tune of LE19.8 million, in a session that saw a relatively high turnover of LE275 million.

Although a stamp duty of 0.001 percent, to be imposed on buyers and sellers in stock market transactions, officially came into effect on Tuesday, Egypt's stock exchange clearing house said on Thursday it had not yet been briefed on the steps for implementing the new law.

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