Impacts of LF 2018 tax pressures on the Tunis Stock Exchange

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By Salah Ayari, Tunis


The context seems to be ominous for the Tunis Stock Exchange in 2018 with the increases provided in the Finance Act (dividend tax, VAT, consumption duty, ..) and the latest increase in the minimum rate of remuneration of the savings reaching 5%. This last decision would, in fact, have a negative impact on the stock market that would encourage some investors to turn away from the stock market to place themselves on products with a better return / risk ratio.
What are the benefits of LF 2018 on the BVMT?

1. The banking sector:
The sector's performance in 2018 is in line with previous years and more particularly for BIAT, BT, Attijari and BNA. For its part, the vicious circle of bank investments in BTA does not seem ready to break. Moreover, the volume of refinancing of banks does not stop breaking records.

In addition, rising prices in 2018 would push Tunisians to use their cash facilities or opting for consumer credit. This would be a real boon to the banks. In addition, the difficulties that some companies would have to confront would have a negative impact on the banks' balance sheet by increasing debts and provisions.

2. The construction sector:
Real estate companies suffer in 2018 a double sentence between, on the one hand, a rise in 0 13 VAT, direct or indirect increases in building materials, and on the other hand, the burden of debts that plague their results. In addition, the expected increases in the key interest rate by the BCT, to counter inflation, which would make the cost of mortgage very prohibitive. As a result, it seems unlikely that the performance trend seen in recent years would change direction. This trend could be put into perspective with a sharp depreciation of the TND which would make the acquisition of real estate attractive for the TRE or foreigners.
For cement manufacturers, the imminent sale of the Carthage Cement shares by the state could create a temporary dynamic in the Tunindex market. Conversely, the decline in 2017 profit margins is expected to increase in 2018 as expenses rise. Construction material companies should suffer the same fate. Salvation would come through the export as was the case in 2017 for SOTUVER or TPR.

3. The automotive and transportation sector:
Although the 2018 LF provides for an increase in corporate tax for dealers from 2019, it does not save them for 2018 with a reduction in the quotas of imported cars and an increase in the consumption duties applied on them. These changes, combined with rising fuel prices, the expected rise in insurance rates and the depreciation of the TND, would make the consumer reluctant to change or buy a new car and push him to opt for the parallel market, which would become even more successful. thanks to the partial deductible system of duties and taxes due.
For the national airline whose prices have hit a record low in 2017, hydrocarbon prices in the future contracts market do not seem to prepare him a pleasant surprise in 2018 with a higher price of 10% on average compared to those found in 2017. The entry into force of the open sky from 2018 would give a coup de grace to this company which is far from ready to compete with low cost European.

4. Distribution and Agri-Food Sector :
Rising food prices could not only lower consumer spending with lower priority, but would also encourage consumers to opt for a more efficient consumption policy. The consumer would inevitably move towards supermarket chains, which would lead to an increase in their turnover.
The entry into force of the 2018 finance law would leave its mark on the Tunis stock market with many impacted sectors. Nevertheless, some would benefit from the export market and their ability to adapt to the new economic context. This initial selection of 2018 affected sectors could be followed by a stock allocation strategy to build a high-potential portfolio.

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