{"id":556075,"date":"2021-10-11T04:00:49","date_gmt":"2021-10-11T04:00:49","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2021\/10\/11\/this-morning-theres-growing-pushback-against-the-cgt-look-for-the-energy-crisis-and-imf-world-bank-meetings-to-dominate-headlines-this-week\/"},"modified":"2021-10-11T04:00:49","modified_gmt":"2021-10-11T04:00:49","slug":"this-morning-theres-growing-pushback-against-the-cgt-look-for-the-energy-crisis-and-imf-world-bank-meetings-to-dominate-headlines-this-week","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2021\/10\/11\/this-morning-theres-growing-pushback-against-the-cgt-look-for-the-energy-crisis-and-imf-world-bank-meetings-to-dominate-headlines-this-week\/","title":{"rendered":"THIS MORNING: There\u2019s growing pushback against the CGT + look for the energy crisis and IMF \/ World Bank meetings to dominate headlines this week"},"content":{"rendered":"

Good morning, wonderful people, and welcome a busy Monday<\/strong> morning on which we have plenty to digest as inflation hits a 20-month high, the World Bank bumps up our post-covid growth forecast, and opposition to a tax on the gains of domestic EGX investors seems to be gaining steam.<\/p>\n

And before we get started: A very Happy Thanksgiving to our Canadian readers. <\/strong>We\u2019re thankful this morning for all of you \u2014 the readers who choose to start their mornings with us each workday. Thank you, one and all, for making it possible for us to do what we do.<\/p>\n

<\/a> There are signs of growing pushback against the capital gains tax on EGX <\/strong>gains<\/strong>:<\/strong> Al Ahly Financial Investments Management<\/a>\u2019s managing director and chief investment officer, Adel Kamel Al-Wali, is the latest to speak out against the 10% capital gains tax<\/a>. The forthcoming tax is the biggest problem facing Egyptian fund managers, Al-Wali told Al Mal<\/a>, calling on the Madbouly government to again consider scrapping it<\/strong>.<\/p>\n

Background: <\/strong>Al-Wali\u2019s comments come after figures from the securities industry and<\/a>a group<\/a>of 20 MPs<\/a> voiced their concerns about the timing of introducing the capital gains tax, asking for it to be (once again<\/a>) postponed, replaced with another levy, or scrapped entirely to protect a still-recovering EGX. A related drive could put the tax on the agenda of the House Planning and Budget Committee<\/a>.<\/p>\n

The worry is that the new tax will further depress the (already sluggish) bourse: <\/strong>Investors will be encouraged to buy equities as long as taxes remain low, Al Wali said, pointing to low trading volumes as well as the EGX\u2019s poor performance compared to regional peers. On the plus side, he noted that the EGX\u2019s sluggish performance means stocks across all sectors are undervalued, making them attractive to investors. The EGX30 is currently down 1.7% YTD.<\/strong><\/p>\n

What\u2019s the CGT?<\/strong> The 10% tithe<\/a> would hit the net realized portfolio gains each tax year of domestic investors on the EGX. Foreign investors would be exempt. After years of delays, Finance Minister Mohamed Maait has said the tax will come into effect on 1 January 2022.<\/p>\n

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THE BIG STORY ABROAD- The global business press is setting up three big stories <\/strong>that look set to dominate headlines this week. They are:<\/p>\n

<\/a> #1- The IMF and World Bank\u2019s annual meetings get underway in<\/strong> Washington, DC, later today<\/strong> \u2014 and it\u2019s make-or-break time for IMF boss Kristlina Georgieva. She stands accused of pushing staff to fudge data to make China look better in the IMF\u2019s once-flagship Doing Business report. The US and Japan want her out, the Financial Times<\/a> reports, while France, Germany, Italy and the UK are more supportive, effectively splitting the 24-member executive board of the organization in two.<\/p>\n

Also this week: G20 finance ministers and central bank governors<\/strong> will meet in DC during the IMF \/ World Bank fall meetings.<\/p>\n

<\/a> #2- The brewing global energy crisis is deepening \u2014 and has created new<\/strong> room for maneuver <\/strong>for some countries \u2014 including Russia, which is sending not-so-subtle signals to the rest of Europe that the EU could avoid a long cold winter \u2026 if only it would bring Russia in from the cold<\/a>. The news comes as energy-intensive manufacturers in the UK have warned they <\/strong>could have to shut down production<\/a><\/strong> if they don\u2019t get help with energy prices. Industries feeling the pinch include producers of steel, glass, ceramics and paper. Closer to home, Lebanon has restored power supply<\/a> to much of the country after earlier running out of fuel \u2014 and India\u2019s coal ministry says the country has \u201c<\/a>ample coal stocks to meet demand from the power industry<\/a>.<\/p>\n

#3- It\u2019s also a big week for market confidence<\/strong> in developed economies <\/strong>as investors fret over the risk that inflation isn\u2019t just rising, but here to stay for a while. Third quarter earnings season kicks off in the US of A this week, and market sentiment will be significantly shaped by \u201cwhat companies reveal about the impact of any supply-chain problems, labor shortages and the continuing pandemic,\u201d the Wall Street Journal<\/a> writes.<\/p>\n

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** IN CASE YOU MISSED IT-<\/strong> Stories from yesterday\u2019s edition of EnterprisePM<\/strong>:<\/p>\n