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Market Update: Egypt bourse soars after Army statement Egypt's bourse registers dramatic gains as Egyptian investors welcome the Armed Forces' ultimatum - seen as aimed at Islamist President Morsi's regime
Egypt's main index was soaring mid-session on Tuesday, gaining nearly 5 percent as optimistic investors welcomed an ultimatum set by the country's Armed Forces on Monday afternoon to end a political impasse. The military spokesman issued the Armed Forces' 48-hour ultimatum to "political forces" to "meet the people's demands" – or be presented with a military-imposed political "roadmap," in an extremely concise televised address to the nation. The statement came after millions Egyptians came out en masse on Sunday 30 June, the anniversary of President Morsi's accession, to demand he step down in what has been described in international media as the largest demonstration in recorded history. "The market is reacting on the assumption that the army's statement spells out the end of President Morsi's regime and will usher in a new, better, future" vice president of the securities deivision, Issa Fathy, at Cairo's Chamber of Commerce, told Ahram Online. "This regime was vindictive and inattentive to the needs and the importance of the stock exchange" added Fathy. In March, a travel ban issued by Morsi-appointed Prosecutor General Talaat Abdullah on Coptic businessmen Onsi and Nassef Sawiris, the founder and chairman of Egypt's largest listed company, Orascom Construction Industries (OCI), related to charges of tax evasion on a 2007 transaction, sent the market tumbling, for instance. Businessman Naguib Sawiris is a vocal opponent of Morsi's regime and the founder of the liberal Free Egyptians party. Later that month, the prosecution further rattled the market by freezing the assets of 23 prominent businessmen and investors on charges of insider trading on a 2007 sale of Al-Watany Bank to the National Bank of Kuwait. This ruling was reversed only two days later, however by Egypt's Criminal Court. Last week, businessman Mohamed El-Amin, who owns Egyptian satellite channel CBC, was slapped with a travel ban on charges of tax evasion. In a Wednesday night speech, President Morsi had accused El-Amin of using his channel to whip up opposition to his regime as well as evading taxes. Egypt's CBC channel is known for airing some of the most popular shows on Egyptian television, including El Bernameg, hosted by satirist Bassem Youssef, a prominent Morsi regime critic. In February, government plans to impose a tax on investor trades had stock exchange heads up in arms. Bourse head, Mohamed Omran warned that the market would no longer be able to attract foreign investors, while member of the exchange's board of directors, Hisham Tawfik told state-owned Al-Ahram paper that the government treated the bourse the same way it treated alcohol and luxury commodities. In April, the government did another about-face when it decided to repeal a 10 percent capital gains tax, which had just been applied to the acquisition of Nationale Societe Generale Bank (NSGB) by Qatar National Bank (QNB) and promised to refund shareholders. At the time, the head of research at Pharos Holding, Hani Genena, told Ahram Online that aside from the negative impact on the market from the tax itself, there had been widespread confusion in its implementation, as there was "no agreed-upon method of calculating tax liability for fund managers and the Exchange." Turnover picked up on Tuesday, reaching some LE390 million as Egyptians became net buyers to the value of some LE65 million. Besides OCI, for which there is an ongoing tender offer by Dutch parent company OCI NV, all EGX30 stocks were in the green and registering dramatic gains. Real estate companies Palm Hills Development Company and Six of October Development & Investment (SODIC) soared by over 9 percent, as did TMG Holding by nearly 6 percent. Orascom Telecom was up by close to 7 percent, as well as investment bank Egyptian Financial Group-Hermes Holding Company, while blue chip Commercial International Bank soared by nearly 9 percent. The broader EGX 70 index was up by some 6 percent. http://english.ahram.org.eg/News/75488.aspx
