Cairo — Overseas investors continued to accumulate Egyptian equities on Wednesday despite ongoing debate over proposed tax reforms and the review of Egypt’s market classification by S&P Dow Jones Indices, suggesting market participants remain broadly constructive on the country’s medium-term investment outlook.
The resilience comes as Egypt’s macroeconomic backdrop shows signs of improvement, supported by strengthening foreign-currency inflows, easing pressure on the exchange rate and growing expectations that inflationary pressures may continue to moderate during the second half of the year.
Against that backdrop, the Egyptian Exchange (EGX) ended trading on a mixed note. The benchmark EGX30 index fell 0.69% to 52,564.42 points, while the EGX33 Shariah Index declined 0.87% to 5,898.85 points. The EGX35-LV index edged up 0.05% to 6,057.25 points.
The more notable trend remained the continued outperformance of smaller and mid-cap stocks. The EGX70 index advanced 0.72% to 15,210.52 points, while the broader EGX100 gained 0.32% to 21,117.72 points, extending a pattern that has characterised much of the market’s recent performance.
Market capitalization stood at approximately EGP 3.78 trillion at the close of trading.
Overseas investors were net buyers with purchases totaling EGP 7.4 billion, helping offset net sales by Egyptian and Arab investors amounting to EGP 4.52 billion and EGP 2.88 billion, respectively. The flows indicate continued foreign interest in Egyptian assets despite regulatory and classification-related uncertainties.
The session was dominated by two issues that have attracted growing attention from market participants. The first is the government’s proposal to permanently replace capital gains tax on listed securities with a 0.5-per-thousand stamp duty applied to both buyers and sellers. The second is S&P Dow Jones Indices’ ongoing consultation regarding Egypt’s classification within global equity benchmarks.
Speaking to Economy Plus, Egyptian Exchange Chairman Omar Reda said the bourse is actively engaging with S&P Dow Jones to address concerns related to market accessibility and liquidity. He noted that regulators are preparing amendments to executive regulations, alongside new mechanisms aimed at facilitating foreign-investor exits and improving market flexibility.
The review has attracted particular attention because a reclassification from Emerging Market to Frontier Market status could affect Egypt’s representation in international equity benchmarks and influence the investment mandates of some institutional funds.
Nevertheless, exchange officials have stressed that discussions remain ongoing and that several reforms are being implemented to strengthen market accessibility and liquidity. Reda also noted that the proposed stamp-duty rate is substantially lower than earlier proposals considered during consultations, helping alleviate concerns among investors.
The government’s draft legislation, currently before parliament, would permanently replace capital gains taxation on listed securities transactions with a fixed transaction-based levy. While investors have closely monitored the proposal, trading activity and market performance have shown little evidence of significant disruption.
Indeed, one of the more striking features of recent sessions has been the market’s ability to absorb potentially adverse headlines without triggering a broader sell-off. Despite uncertainty surrounding both the tax framework and the S&P review, foreign buying has continued while smaller-cap shares have maintained their upward momentum.
Several analysts argue Egyptian equities continue to benefit from attractive valuations relative to regional peers, particularly among mid-cap industrial, consumer and real-estate companies where valuation multiples remain below comparable markets despite improving macroeconomic conditions, supporting continued investor appetite.
Among Wednesday’s top performers, Aspire Capital Holding for Financial Investments rose 20.0% to EGP 0.33, while Subscription Rights of Aspire Capital Holding for Financial Investments-3 surged 96.43% to EGP 0.11. ASEC Company for Mining (ASCOM) climbed 14.1% to EGP 57.05.
On the downside, Misr Duty Free Shops fell 5.89% to EGP 48.27, Saudi Egyptian Investment & Finance declined 5.66% to EGP 188.68, and Amer Group Holding lost 4.78% to close at EGP 2.79.
The key takeaway from Wednesday’s session was not the modest decline in the EGX30, but rather the market’s continued resilience in the face of potentially adverse developments. Overseas investors remained net buyers, small- and mid-cap shares extended their gains and trading activity remained stable despite ongoing debate over taxation and market classification.
For now, the market appears increasingly focused on corporate earnings prospects, attractive valuations and signs of improving macroeconomic stability rather than near-term regulatory uncertainty. Whether that resilience persists may depend on the successful implementation of reforms aimed at enhancing liquidity, improving market accessibility and maintaining Egypt’s standing within global equity benchmarks.
