The Egyptian Stock Exchange (EGX) has quickly ended celebrations over the IMF’s recent emergency financial assistance to Egypt by declining 1.8% on Wednesday.
The decline followed a 3% jump the day before.
The decline came on the back of parliament’s Plan and Budget Committee proposal to raise the stamp tax on EGX transactions, hampering the main index’s testing of upward levels.
The decline has also pushed Egyptian and foreign investors to sell following frustration and loss of appetite for investment.
The blue-chip index, the EGX30, closed at the end of Wednesday’s session at 10,396 points, while the EGX70 EWI index decreased by 2.18%, to settle at 1,113 points.
Mohamed Hassan, Managing Director of Medaf Asset Management, anticipated that the market would move in an upward direction over the medium term, above the 12,000 point level. He suggested a good performance for the food, healthcare and banking sectors.
Hassan said that the resistance area of 10,500 points hindered the market’s continued rise over the current week. Egyptian institutions have turned to selling side-by-side with foreign institutions.
He advised medium- and long-term investors to buy during declines and short-term investors to trade between the level of support and resistance. This would stop losses at the uptrend line, without activating the marginal purchase.
Hassan added that the stamp tax law amendments are insufficient. Raising the value of the tax imposed on securities trading operations to 0.75 per thousand, instead of 0.5 per thousand, had a negative impact on yesterday’s session. It will continue its negative impact on the financial market during the upcoming sessions.
The market recorded a trading value of EGP 1.05bn through the implementation of 29,300 transactions executed on 271.3 million securities. This occurred through trading on 172 listed companies, of which 26 shares rose, 123 shares declined while 23 shares did not change.