Financial analysts have warned against the negative repercussions of the decision of the coup leader, Abdel Fattah El-Sisi, to pump 20 billion pounds ($ 1.3 billion) into the Egyptian Stock Exchange to revive the stocks after suffering severe losses in several continuous sessions.
Financial analysts considered that the big leap that the Egyptian Stock Exchange made during Monday’s transactions is a temporary recovery that will disappear with the expiry of the “financial injection” effect.
The leap achieved by the Egyptian Stock Exchange was driven by intense purchases from Egyptians, and a selling trend to Arabs and foreigners, especially with the growing fears of the repercussions of the spread of the Coronavirus on Arab and international financial markets.
On Sunday, Sisi announced the allocation of 20 billion pounds to support the Egyptian stock exchange, while the National Bank of Egypt and Banque Misr announced pumping 3 billion pounds to invest in shares of Egyptian companies traded on the stock exchange.
The Egyptian government issued a package of decisions last week, including exempting foreigners from capital gains taxes permanently, postponing them to residents until 2022, reducing stamp duty on stock exchange transactions, and fully exempting stamp tax from spot operations.
It also decided to reduce the tax on dividends by 50 percent to 5 percent for companies listed on the stock exchange, reduce the expenses of the stock exchange, clearing and financial supervision, the investor protection fund, and the value of the assessed contribution of the investor protection fund for trading operations on the stock exchange by 50 percent.
Exodus of foreign investors
Commenting on the big leap that the Egyptian Stock Exchange achieved during Monday’s trading, the economist and former head of the Egyptian and Arab direct investment societies said that injecting money into the stock market will give an opportunity for some investors to leave the Egyptian market with great gains, warning of a significant decline in the stock market after the end of the impact of those funds As long as the reasons are still valid.