Egypt Stocks Rise 1% on Corporate Tax Law Changes

Egypt's benchmark EGX30 index rose by 1 percent to 5,455 points in a session that saw atypically high daily turnover of some LE1.1 billion, including LE695 million in bond trading.

"Investors were encouraged by amendments to Egypt's tax law, which were ratified by the Shura Council [the upper house of Egypt's parliament] on Monday," Eissa Fathi, vice head of securities at the Cairo Chamber of Commerce, told Ahram Online.

"Under the new arrangement, all companies will be taxed at a unified rate of 25 percent," Fathi explained. "This is compared to proposed legislation that had called for levying a 20-percent tax on companies earning less than LE10 million a year, and a 30-percent tax on those earning more than LE10 million annually."

Solid performances by a handful of blue chips contributed to Wednesday's market upswing, thanks in part to strong financial results, Fathi explained. Property shares Palm Hills Development (PHD), the Talaat Mostafa Group and SODIC led the gainers, climbing by 4, 2.7 and 2 percent respectively.

PHD announced the realisation of LE45.3 million (approximately $6.5 million) in consolidated net profits in the first quarter of 2013, compared to a net loss of some LE16.3 million in the same quarter last year.

Telecommunication bellwether Orascom Telecom (OT), for its part, rose by 1 percent on Wednesday, despite reporting a $204 million net loss in the first quarter of this year compared to $120.4 million in profits one year earlier. Fathi attributed OT's market gains to "the company's rejection of an acquisition offer made by a subsidiary of Russian billionaire Mikhail Fridman's Altimo."

OT said that its board of directors had called for rejecting the Cyprus-based firm's March offer to buy the company out at $0.70 a share. According to OT officials, an independent financial adviser had valued OT's shares at $0.86 each.

Heavyweight share Commercial International Bank, meanwhile, rose by 1.8 percent for the day, while Orascom Construction Industries – Egypt's largest listed share in terms of capitalisation – shed 0.2 percent.

The broader-based EGX70 index climbed 0.4 percent in a session that saw net selling by domestic investors (LE44.4 million) and net purchasing on the part of foreign investors (LE14.9 million).