It has been a torrid week for
While to a degree the selling pressure has been overdone, a bounce is widely expected, although likely to be short-lived. From here on, expect markets to trade sideways, with no major positive catalysts in the near term to drive markets higher. With
On Wednesday, the
This raises more questions with respect to whether there is more to be sold in
Answers to these questions would be crucial for
The only positive side to the market's disclosure was that Aabar sold just 2.72% in
The idea includes providing infrastructure for increasing agriculture, and facilitate ownership for Egyptians who will work on them. The
He said financing such projects is a momentous task, so he will rely on three sources: contributions from Egyptians abroad, domestic and foreign investors, and foreign aid. According to the president, removal of subsidies must be done gradually, and cannot be implemented without first raising Egyptians' income.
Since Sisi's election, the Egyptian Exchange has suffered bouts of volatility, largely due to investors booking profits in the run up to the ballot, but also on account of negative reaction by the market post news of the new draft capital gains taxes that will be imposed on equity market investors.
The imposition of these taxes was bound to happen given earlier indications post-2011 revolution. However, an argument can be made as to whether the timing can be justified when
On non-Arab investors, the effective impact on Net Asset Values could vary depending on the type (corporate or individual), domicile, double taxation treaties etc, as some foreign investors might anyway be subject to taxes in the country of origin without regard to the new laws in
It is worth noting that the proposed capital gains tax rate of 10% is lower compared to other emerging markets -
From the government's point of view, while the new taxes could generate an additional stream of much-needed recurring revenue, it would also result in large income streams as and when big-ticket transactions are executed on the Egyptian Exchange.
This also means that companies that plan to list solely with the idea of avoiding taxes on capital gains would have their savings curtailed because of the 10% levy. The indirect implications on account of the new tax could also be felt on Merger & Acquisitions transactions, with multiples and pricing to be readjusted.
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