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Egypt’s bourse was headed for its biggest daily gain in 22 months on Monday after the government said it had put on hold a new tax on capital gains from stock market operations for two years.
The Cairo index surged 6.2 per cent, with all stocks positive. At least a dozen names, including blue-chips Talaat Moustafa Group and EFG Hermes, surged their daily 10 per cent limits, indicating the rally could continue in the next session.
The government froze the plans for a 10 per cent tax on capital gains on Monday, reversing a central component of its economic reform agenda that investors had criticised. It has kept in place a 10 per cent dividend tax.
The introduction of the new taxes last month sparked a sell-off by disgruntled investors, who complained that tax regulations were too complicated and would make the bourse less competitive than other markets. The main Cairo index fell 5 per cent in April.
Putting the tax on hold “translates to a reduction in the cost of capital for investors in general — specifically, Egyptian and Gulf investors,’’ Cairo-based Naeem brokerage said in a research note.
“At the same time, this also rules out earlier concerns over the actual implementation of the capital gains tax and the challenges that might arise on calculation and recoveries.’’
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