The Egyptian Exchange (EGX) fell by 9.34% on Sunday, suffering its biggest decline since November 2012, losing 1,045 points as a result of the measures announced by the government last Friday to face the COVID-19 epidemic.
The benchmark index EGX30 closed on Sunday at 10,148.4 points, and the EGX70 EWI for small and medium stocks fell by 7.37% to close at 1,015.4 points.
The EGX management suspended trading on the shares of 123 listed companies for 10 minutes, including 38 companies after the first hour of Sunday trading session, as the decline exceeded 5%.
Stock market dealers expected the EGX to continue its decline in the short term with the rise in fears from a recession in the economy.
Ehab Saeed, Managing Director of Osool Securities, said the government’s decision to postpone the application of the capital gains tax to transactions in the stock exchange would lead to worse results than the continuation of taxes in their current form.
He stressed that the best decision for the market is to cancel all types of taxes and stop thinking about the money market as a tool for collecting taxes, especially as it is currently in its worst condition.
Saeed attributed the difference in dealing with the precautionary measures between the Egyptian and American stock exchanges, to Egypt’s need for more incentives to invest in securities such as reducing prices and exempting companies from real estate taxes. He directed dealers to seize the opportunities for bids to sell shares and anticipate a gradual improvement in the economic conditions.
Mohamed Maher, CEO of Prime Holding Company, agreed with Saeed. He confirmed that the violent downturns in the Egyptian market will continue due to the weakness of the market on the one hand, and the strong impact of the spread of the coronavirus on the other.
He said the EGX needs a complete restructuring, stressing the need to decide on the pending files, including “transaction taxes”, “registration expenses,” and “distributions taxes” to increase the volume of dealers besides getting a clear reaction by decision makers to save the money market by making decisions that can save investment.
Amr El-Alfy, Director of Research Department at Shuaa Securities, expected that EGX indexes will continue to move in a short-term direction throughout a period of up to two months.
He ruled out the possibility of further decline in the market.
El-Alfy pointed out that the global market declines resulting from the outbreak of the Coronavirus added a new obstacle to the EGX’s challenges, pointing out that the Egyptian market is highly affected by global and Gulf markets.
He said the market needed some supportive decisions before the wave of violent retreat, which would have lessened its vulnerability, pointing to the possibility of buyers appearing from Egyptian institutions, especial with the stock price reaching unprecedented levels.
The market recorded trading values of EGP 942.3m, through the circulation of 197 million shares, by implementing 16.700 sales and purchases. This was after trading carried out on the shares of 177 listed companies, of which only four shares rose, and the prices of 137 securities fell. The prices of 35 other shares have not changed, making the market capital of listed shares settle at the level of EGP 560.16bn, losing about EGP 39.6bn during the session.
Coronavirus has extended to 20 countries in Africa, following the confirmation of Kenya, Ethiopia, Sudan, Guinea, Mauritania, and Eswatini who announced their first cases last Friday. The number of cases recorded in Egypt reached 110.