After former Egyptian army chief Abdel Fattah al-Sisi’s win in the presidential election, Egypt exchange traded fund plunged Thursday on a new capital gains tax for investors and the new administration’s unclear objective for the economy.
The Market Vectors Egypt Index ETF (NYSEArca: EGPT) fell 5.2% Thursday. EGPT, though, is still up 32.4% year-to-date.
The benchmark EGX 30 Index declined 3.5% Thursday, the most in two months. The index advanced to a six-year high ahead of the elections on May 25, but it has since been steadily falling.
Many Egyptians don’t feel that Sisi has provided a clear solution for the high unemployment rate, widening budget deficit and widespread corruption, Reuters reports. Investors are looking for Sisi to end the country’s costly energy subsidies, impose a clear tax plan to reduce the debt deficit and provide guidance on the weak currency.
Egypt’s weak turnout – only 46% of the country’s 54 million eligible voters filled their ballots – also raised questions on the credibility of Sisi’s mandate.
“All in all the weak turnout will make it harder for Sisi to impose painful economic reforms that international institutions and investors are demanding,” Anna Boyd, an analyst at IHS Jane’s, said in the article.