Egypt’s blue-chip stock index tumbled yesterday after Reuters reported that authorities were considering temporarily reintroducing a stamp duty on stock market transactions, while Saudi Arabia was supported by quarterly corporate earnings.
Egypt’s index dropped 3.7%, its largest single-day decline since June 2016.
Local traders were heavy net sellers after a finance ministry source, speaking on condition of anonymity, said: “We are studying temporarily re-imposing a stamp duty on stock market transactions pending the return to a capital gains tax, which has been postponed since May 2015.”
Mohammad El Nabarwy, chief investment officer of Cairo-based HC Securities & Investment, said investors had priced in an expected three-year delay in the launch of a capital gains tax, so “the market entered panic mode”.
Wafik Dawood, portfolio manager at Compass Capital, said however that the market had overreacted.
The index had soared 56% since the Egyptian pound was floated on November 3, leaving it ripe for profit-taking.
“The market needed a breather and with the strong retail participation, any dip in the market could turn into a sell-off.”
Six shares in the index slumped their 10 % daily limits, including Ezz Steel.
The Riyadh index edged up 0.3 % but trading volume dropped to its lowest in 12 weeks.
The largest lender by assets, National Commercial Bank, jumped 3.9% after posting a 7.5% rise in net profit in the three months to December 31 to 2.29bn riyals ($611mn). The bottom-line was boosted by higher income from commissions and investments.
That was slightly ahead of estimates; analysts at Alistithmar Capital and SICO Capital had given forecasts for NCB’s fourth-quarter net profit of 2bn riyals and 2.09bn riyals respectively.
Al Rajhi Bank rose 0.4% after the kingdom’s second-largest lender reported a 5% rise in fourth-quarter net profit, meeting analysts’ forecasts as financing, investment and other income increased.
Shares in NCB are trading at a small discount to analysts’ average fair value estimate while Al Rajhi is trading at a premium, according to Reuters data.
Saudi Basic Industries slipped 0.3% to 93.00 riyals.
The largest petrochemical maker reported a 47.7% jump in fourth-quarter net profit but that was at the lower end of forecasts.
Sabic said lower average operating and other non-core costs were the main reason for the rise in profit.
But PetroRabigh surged its 10% daily limit after it swung to a net profit of 183mn riyals in the fourth quarter from a loss of 1.01bn riyals a year earlier, citing relatively stable operations and the positive impact on inventory valuations of feedstock price increases.
Sahara Petrochemical jumped 5.1% after swinging to a net profit in the fourth quarter of 160mn riyals, its highest quarterly profit since the second quarter of 2014.
Kuwait’s index, which is usually thinly traded, continued to gain and added 1.3% in the heaviest daily volume since 2013.
The index is up 11.8% since January 1, outperforming other regional and most emerging markets.
EGF Hermes said in a note the reasons for the strong volumes were unclear but it believed weaker real estate prices were pushing money into other assets, and local brokers reported high participation among local investors.
Elsewhere in the Gulf, Dubai’s index edged down 0.1% to 3,690 points; Abu Dhabi’s index rose 0.2% to 4,705 points; Oman’s index rose 0.2% to 5,734 points, while Bahrain’s index rose 0.5% to 1,240 points.