Tax plan hits Egyptian ; banks drag on most Gulf markets

Reuters

Cairo’s main stock index retreated on Thursday after Reuters reported the finance ministry would recommend a tax on stock exchange transactions. In Gulf markets, banks were a drag on most bourses as minutes from a US Federal Reserve meeting showed little support for a March rate rise. Gulf currencies are pegged to the US dollar, so policy rates in the region would follow any move by the Fed, which would boost banks’ margins.
Cairo’s main index dropped 1.3 percent as just over three quarters of the 30 most liquid shares retreated. Selling pressure intensified in the final 90 minutes of trade after Reuters reported that the finance ministry would recommend introducing a 0.2 percent stamp duty on stock transactions for both sellers and buyers.
However, Allen Sandeep, head of research at Cairo-based Naeem Brokerage, said the impact would not be severe because the proposed rate was lower than the market had expected.
“Most emerging markets have stock market transactional costs, whether capital gains tax or stamp duty or a combination of both. The proposed rate is acceptable in my opinion,” he said, adding it was lower than the 0.4 or 0.5 percent that the market had thought likely.
Sandeep said the main factors driving the market had been an appreciation in the Egyptian pound in recent days, which prompted foreign buyers to book gains this week, and quarterly earnings from Egyptian companies.
“Earnings have been a mixed bag so far, with real estate companies coming out with healthy numbers, but we still await results from companies that are dependent on imports and those most exposed to FX losses,” he said.
Egypt floated the pound on Nov. 3.
Global Telecom Holding fell a further 5.9 percent on Thursday, after slumping 7.9 percent in the previous session on news it had been fined $60 million in a lawsuit.

GULF
Saudi Arabia’s index edged 0.3 percent lower after an hour of trade with half of the listed banks declining. Alawwal Bank lost 1.3 percent and National Commercial Bank fell 0.7 percent.
Shares in real-estate company Taiba Holding dropped 1.5 percent after its board recommended paying a cash dividend of 0.4 riyals ($0.11) per share for the fourth quarter of 2016, taking the full year dividend to 1.6 riyals, compared to 2.0 riyals paid to shareholders in 2015.
In Abu Dhabi, banks – which make up almost half of the total market value – underperformed the main index, which rose 0.3 percent. Abu Dhabi Commercial Bank fell 0.8 percent.
However, telecom operator Etisalat, the biggest stock by market value, rose 1.4 percent. Dubai’s main index, which outperformed its peers on Wednesday, fell 0.3 percent on profit taking. Builder Arabtec lost 1.1 percent on profit taking after surging 15 percent on Wednesday after the company, which reported a fourth-quarter loss last week, won regulatory approval for its recapitalisation plan.
Qatar’s main index dipped 0.3 percent as telecoms operator Ooredoo dropped 3.8 percent after reporting nearly flat fourth-quarter net profit attributable to shareholders of 361 million riyals ($99 million).