- Title: Egypt stocks slump on news that temporary stamp duty could be imposed
- Date: 19th January 2017
- Summary: CAIRO, EGYPT (FILE) (REUTERS) EXTERIOR OF EGYPTIAN STOCK EXCHANGE SIGN READING IN ARABIC: "FINANCIAL MARKET" TOPSHOT OF EXCHANGE SCREEN TRADERS TOPSHOT OF EXCHANGE
- Embargoed: 2nd February 2017 16:48
- Keywords: Egypt stocks slump temporary stamp duty imposed
- Location: CAIRO, EGYPT
- City: CAIRO, EGYPT
- Country: Egypt
- Topics: Economic Events,Equities Markets
- Reuters ID: LVA0015ZR0HOT
- Aspect Ratio: 16:9
- Story Text: Egypt's blue-chip stock index tumbled 3.4 percent by the early afternoon on Thursday (January 19) after Reuters reported that authorities were considering temporarily reintroducing a stamp duty on stock market transactions.
On Wednesday, the International Monetary Fund released the details of its $12 billion, three-year agreement to support a wide-ranging programme to reform Egypt's ailing economy and restore financial stability.
The agreement revealed that Egypt had committed to imposing either a capital gains tax or a stamp duty on stock market transactions by the 2017/18 fiscal year.
CEO of Pharos investment, Angus Blair, said that the fall was due to an overreaction.
"And then of course within the IMF package there was a note within it that the government intends to have a capital gains tax. It is a very small tax so I think what happens is that there might be an over reaction to the news about what's happening with the capital gains tax and I think that the stock market will look to stabilize in the short-term."
Egypt imposed a stamp duty on buyers and sellers in May 2013, collecting more than 350 million Egyptian pounds ($18.77 million) in revenue before the levy was replaced in July 2014 by a 10 percent capital gains tax.
Egypt suspended the capital gains tax in May 2015 for two years, under pressure from investors. They said it was discouraging business just as Egypt was struggling to recover from a plunge in confidence after a 2011 uprising and subsequent political upheavals.
The Higher Investment Council last year extended the suspension of capital gains tax for three years, until 2020 as part of efforts to draw investors back.
Egypt won final approval for its IMF programme just days after the central bank took the historic step of floating the currency. Together, the moves unleashed a deluge of investment in the Egyptian stock market, which has hit record highs in recent weeks.
Blair asked investors to hold their breath.
"So I would suggest to investors at the moment to just hold your breath you can take some profits but in the end the stock market should grow again because the support package from the IMF and the statement from the IMF in general is actually pretty positive. We remain pretty positive about Egypt assuming that the government continues more aggressively with its reform program."
More than 270 companies are listed on the Egyptian stock exchange and more than 500,000 investors are registered to trade there.
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