Rania Yacoub, president of Three Way Securities, said in an interview with “Al Arabiya”, that: Egyptian marketDuring the last two years, the EGX70 index witnessed complete control over the market performance, and a significant rise of this index to record levels.
Yacoub added that the shares of the EGX70 index rose in an exaggerated manner, and there were many concerns, especially that the marginal purchase ratios, or what is known as margin, were high in the market.
She pointed out that with the start of profit-taking operations in the third quarter of 2021, we witnessed an acceleration in sales and declines, which led to the transformation of profit-taking operations into large losses for the portfolios of small investors and individuals in general.
And she continued, “It was striking that the role of institutions was absent during the last two years, and this was reflected in weak movements of the EGX30 index and the leading stocks, and consequently, profit-taking operations caused great pressure on the performance of the indices.”
Yaqoub explained that the last quarter of 2021 witnessed exits, intensive selling and closing of marginal positions on EGX70 shares, as well as the return of part of the liquidity once again to the leading shares, prompted by news and positive incentives for these shares, most of them as a result of acquisitions and business results.
She indicated that liquidity was injected into the leading stocks in the last quarter of the year, and this was reflected in closing above 11600 points.
She stated that with the beginning of this year’s trading, the main index reached 12,000 points, a level that the market has not witnessed over the past years.
Rania believes that the volumes of liquidity are still weak so far, calling for incentives to attract new liquidity to the market.
Regarding the start of implementing the capital gains tax, the president of Threeway Securities said that the tax application law was issued in 2014 and was in its initial form very unfair, and led to many fears and a quick reaction from the market represented by a significant decline and successive sales from Arab and foreign portfolios, Then the tax was deferred in 2016 for 3 years.
She indicated that in 2017, Egypt approved a temporary stamp tax, which was gradual at that time. And in 2020, the stamp tax began to be fixed at one per thousand on the purchase and sale process, until the capital gains tax is applied.
She pointed out that the capital gains tax will be applied to individual Egyptians, while foreigners have been exempted from the tax, provided that a stamp tax of one and a quarter per thousand is applied to them.
She revealed that the last quarter of last year witnessed a lot of pressure to make amendments to the capital gains tax in order to be characterized by a kind of justice, but in all cases the announcement of the tax had a negative impact on the performance of the market.
At the same time, Jacob indicated that the recent amendments eased the burden of this tax, because it exempted the parallel return if investment was made in a bank, for example, as a kind of encouragement to small investors.