Egypt’s biggest bank weighs on index

Egypt’s blue-chip index slumped to an 18-month low yesterday, weighed down by Commercial International Bank and concern over a proposed law on taxation of Treasury holdings, while Abu Dhabi rose on banking sector gains.

The Egyptian index dropped 2.4 per cent, with 26 of 30 stocks falling. The country’s biggest lender, Comi, fell for a third straight day, losing 2.5 per cent.

Comi and the index have been dented by the proposed changes, which could result in a larger tax bill for banks on despite the nominal tax rate remaining unchanged, said Amr Hussein Elalfy, head of research at Shuaa Securities Egypt.

All banking stocks in the index dropped. Several banks have issued statements on the legal changes, with Comi saying they would apply to new Treasury bonds with no retrospective effect and that the tax rate on earnings from Treasuries would stay at 20 per cent.

Exchange data yesterday showed foreign investors were net sellers of Egyptian stocks, along with Arab investors.

When UAE markets reopened yesterday, the Abu Dhabi market added 2.7 per cent for its biggest gain in two years. The emirate’s largest lender, First Abu Dhabi Bank, added 3.7 per cent.

Yesterday was the bank’s first trading day after its weighting in MSCI’s Emerging MarketsIindex doubled, meaning that some passive funds linked to the index may have bought the stock yesterday. Abu Dhabi Commercial Bank, meanwhile, advanced 3.8 per cent.

Saudi Arabia’s index edged down by 0.2 per cent, with petrochemicals company Saudi Kayan losing 1.8 per cent and Samba Financial Group shedding 1.9 per cent.

Southern Province Cement rose 2.3 per cent after it signed a contract to sell 20,000 tonnes of Portland cement material to war-ravaged Yemen, where Saudi Arabia has begun working on infrastructure projects in areas it controls.

Dubai’s index snapped a sixday losing streak with a 0.3 per cent gain. Emaar Properties, climbed 1.8 per cent while DXB Entertainments gained 5.1 per cent.

However, Dubai Investments lost 4.4 per cent after hitting a five-year low in the previous session. The shares have been sliding after MSCI decided to move the stock to its UAE small-cap index from its UAE standard index.