Cairo index surges 6.2% after capital gains tax put on hold
Egypt’s bourse was headed for its biggest daily gain in 22 months on Monday after the government said it had put on hold a new tax on capital gains from stock market operations for two years.
The Cairo index surged 6.2 per cent, with all stocks positive. At least a dozen names, including blue-chips Talaat Moustafa Group and EFG Hermes, surged their daily 10 per cent limits, indicating the rally could continue in the next session.
The government froze the plans for a 10 per cent tax on capital gains on Monday, reversing a central component of its economic reform agenda that investors had criticised. It has kept in place a 10 per cent dividend tax.
The introduction of the new taxes last month sparked a sell-off by disgruntled investors, who complained that tax regulations were too complicated and would make the bourse less competitive than other markets. The main Cairo index fell 5 per cent in April.
Putting the tax on hold “translates to a reduction in the cost of capital for investors in general — specifically, Egyptian and Gulf investors,’’ Cairo-based Naeem brokerage said in a research note.
“At the same time, this also rules out earlier concerns over the actual implementation of the capital gains tax and the challenges that might arise on calculation and recoveries.’’
Copper steady as downbeat US data pressurises dollar
London copper futures were steady at the start of the trading week on Monday, supported by a softer dollar following weak US economic data.
Copper has been consolidating since hitting this year’s high of $6,481 per tonne in early May, with no big spike in demand from top consumer China despite efforts by the government to shore up economic activity.
“Longer term, I don’t expect much demand increase from China. Their housing isn’t really doing very well and that’s where most of demand goes to,” said Daniel Ang, an analyst at Phillip Futures.
Chinese new home prices fell for the eighth straight month in April from a year earlier, with analysts warning that any recovery will take some time amid a huge inventory of unsold homes and a slump in real estate investment growth to the lowest since the global financial crisis.
Three-month copper on the London Metal Exchange was little changed at $6,420.50 a tonne by 0702 GMT, after ending last week with a modest gain.
The most-traded July copper contract on the Shanghai Futures Exchange closed 0.4 per cent higher at 46,110 yuan a tonne.
Investors will be watching out for this week’s HSBC flash manufacturing Purchasing Managers’ Index for China for indications on whether recent stimulus efforts, including interest rate cuts, have boosted the activity in the world’s No. 2 economy.
Ang sees resistance for LME copper at $6,500 and support at $6,300.
The dollar languished near a four-month low against a basket of currencies after downbeat US economic data bolstered expectations the Federal Reserve would wait longer to raise interest rates.
US industrial production fell for the fifth straight month in April and consumer confidence sagged in early May, suggesting the economy was growing at only a modest pace in the second quarter.
A weaker greenback makes dollar-denominated commodities cheaper for buyers holding other currencies.
Premiums for primary aluminium have halved in Asia since March after supplies increased and on fears of rising exports of Chinese semi-finished aluminium products, traders said.
Goldman Sachs said aluminium prices needed to remain low to restrict output, particularly from outside China.
“While much of the price declines have already occurred, we believe that prices will need to remain low and fall further during 2015 in order to induce further ex-China closures so as to balance the market,’’ Goldman analysts said in a report.
LME aluminium was up 0.3 per cent at $1,858 a tonne after touching a 2-1/2-week low of $1,847 last week.
Adanis promise to raise load factor at Udupi plant
Adani Power Ltd, which completed the acquisition of Udupi Power Corporation Ltd (UPCL) from Lanco Infratech, says it will sort out the coal shortage problem and increase the plant load factor (PLF) of the 2×600-MW thermal power plant in Yellur in Dakshina Kannada district.
At the present, UPCL’s PLF is around 60 per cent. In the coming months, the company plans to increase it substantially to around 90 per cent.
UPCL depends entirely on imported coal for power generation. Of its total production, around 90 per cent is consumed in Karnataka, while the company has rights to sell the rest elsewhere. Through its power purchase agreement, UPCL sells power to Karnataka-based electricity supply companies at an average of ₹4.05 a unit.
After UPCL’s integration with Adani Power, Rajesh Adani, Managing Director, Adani Group of Industries, called on Karnataka Chief Minister Siddaramaiah and Energy Minister DK Shivakumar.
“We have just taken possession and integrated UPCL to our company. The production is going on and there have been no stoppages,” Rajesh Adani told BusinessLine.
“All problems including the debt of UPCL have been taken over by us. Now, slowly we are coming into the picture. We will sort out coal shortage and other operational issues which are plaguing UPCL,” he added.
Adani’s meeting with the chief minister is coming at a time when the Karnataka Electricity Regulatory Commission and the Karnataka High Court are hearing a tariff issue complaint by the company against the state government.
A senior state government official said the Karnataka government owes UPCL around ₹1,000 crore due to tariff dispute.
Emerging out of the meeting, Energy Minister Shivakumar said: “Rajesh Adani’s visit is a courtesy call after they bought UPCL and they have asked for the state government’s cooperation.”
“In turn, the state government has asked the company to fulfil all the promises made by Lanco Infratech to the local community in the plant’s neighbourhood in Dakshina Kannada,” he added.
Adani Power is yet to take a call on expansion of UPCL’s power generating units. The company way back in 2010 had its expansion plan approved.
This post was written by Atlantic Admin