In an interview with Al Arabiya, Rania Yacoub, head of Three Way Securities, said that the Egyptian market has seen complete control of the EGX70 index on the market over the past two years. performance of the market and a significant increase in this index to levels record .
Yacoub added that the shares of the EGX70 index have risen in exaggerated way and that there were many worries, in particular that marginal buying ratios, or what is known as margin, were high in the market.
He pointed out that with the start of profit-taking operations in the third quarter of 2021, there has been an acceleration in sales and declines, which has led to the transformation of profit-taking operations. in large losses for the portfolios of small investors and individualsin general.
He continued: “It was surprising that the role of institutions has been absent over the past two years, and this has been reflected in the weak movements of the EGX30 index and the major stocks, and as a result, profit-taking operations have caused great pressure on performance of the indices “.
Yaqoub explained that the last quarter of 2021 saw exits, intensive selling and closing of marginal positions in EGX70 shares, as well as the return of some cash to the main shares, driven by positive news and incentives for these shares, mainly as a result of acquisitions and business results.
He pointed out that liquidity was injected into major stocks in the final quarter of the year, and this was reflected in the close above 11600 points.
He stated that with the start of the negotiations of questyear, the main index hit 12,000 points, a level the market has not seen in recent years.
Rania believes liquidity volumes are still weak so far, calling for incentives to attract new liquidity to the market.
Regarding the start of the implementation of the capital gains tax, the president of Threeway Securities said that the tax enforcement law was enacted in 2014 and was in its initial form very unfair, and sparked a lot of fears and a rapid market reaction represented by a significant decline and subsequent disposals of Arab and foreign portfolios, then the tax was deferred in 2016 for 3 years.
He indicated that Egypt passed a temporary stamp duty in 2017, which was gradual at the time. And in 2020, the stamp duty began to be set at one per thousand on the buying and selling process, until the capital gains tax was applied.
He specified that the tax on capital gains will be applied to individual Egyptians, while foreigners have been exempted from the tax, provided that the stamp duty of one and a quarter per thousand is applied to them.
It revealed that the last quarter of last year saw a lot of pressure to make changes to the capital gains tax in order to be characterized by some kind of justice, but in all cases the announcement of the tax had a negative impact on performance of the market.
At the same time, Jacob indicated that recent amendments lightened the burden of this tax, because it exempted the parallel return if the investment was made in a bank, for example, as a kind of encouragement for small investors.
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