Egypt Stocks Slump Most in a Year on Tax Plans; Abu Dhabi Drops

Egypt’s benchmark EGX 30 Index fell the most in a year after the government said it’s preparing a levy on investor profits. Abu Dhabi’s measure also retreated.

Egypt’s gauge dropped 4.2 percent to 7,894.73 at the close in Cairo. Trading was halted for 30 minutes after the broader EGX 100 Index slid 5 percent. About 803 million Egyptian pounds ($112 million) of stocks traded, compared with a one-year full-day average of 594 million pounds. Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, led declines with a 2.7 percent slide. Abu Dhabi’s ADX General Index fell from an eight-year high.

Stocks in the North African country have tumbled 9.9 percent over the past four days amid plans for the tax and as investors collected profits on former army chief Abdel-Fattah El-Sisi winning the presidency. The government submitted a draft law today for ratification, calling for a 10 percent annual tax on net realized portfolio profits and cash dividends, according to a bourse statement.

“The market is panicking, especially retail investors that have made substantial profits,” Mohamed Ebeid, head of brokerage at EFG-Hermes Holding SAE, said by phone from Cairo. “This tax will have a long-term impact, especially on companies that are considering initial public offerings.”

The Abu Dhabi Securities Market General Index declined 1.8 percent before the United Arab Emirates and Qatar are upgraded to emerging markets status tomorrow by index provider MSCI Inc. National Bank of Abu Dhabi PJSC dropped 6.7 percent, the most since December 2009, to 16.1 dirhams.

Dubai’s DFM General Index, the world’s best performing gauge this year among more than 90 tracked by Bloomberg, slid 0.6 percent. Emaar Properties PJSC, the developer of the world’s tallest tower, retreated 3.8 percent after its malls unit raised a $1.5 billion Islamic loan from local banks ahead of a planned IPO this year.

Many U.A.E. and Qatar stocks are overpriced, Mark Mobius, who oversees about $50 billion as executive chairman of Templeton Emerging Market Group, said in comments published by Abu Dhabi’s The National newspaper today. Abu Dhabi’s index is trading at 14.8-times estimated earnings for 2014, while gauges in Dubai and Qatar are at 20.3-times and 15.2-times respectively, data compiled by Bloomberg show. That compares with 11-times for the MSCI emerging markets measure.

Saudi Arabia’s Tadawul All Share Index rose 0.4 percent and Qatar’s QE Index was little changed. Oman’s gauge advanced 0.5 percent, Kuwait’s added 0.4 percent and Bahrain’s measure climbed 0.1 percent.

Israel’s benchmark TA-25 index increased 0.3 percent to 1,397.35, while the yield on the benchmark 3.75 percent bond due 2024 added two basis points to 2.92 percent.

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