Sunday, June 23, 2013

New fears grip Egypt's investors

Egypt's economy remains in a precarious state. As if the pressure on emerging markets is not enough, the planned anti-government protest could end up involving the military and potentially destabilizing the nation.
CBS: - Egypt's army chief warned on Sunday that the military is ready to intervene to stop the nation from entering a "dark tunnel" of internal conflict.

Gen. Abdel-Fattah el-Sissi spoke a week ahead of mass protests planned by opponents of Islamist President Mohammed Morsi. There are fears the demonstrations calling for Morsi's ouster will descend into violence after some of the president's hard-line supporters vowed to "smash" them. Others declared protesters were infidels who deserve to be killed.

El-Sissi's comments were his first in public on the planned June 30 protests. Made to officers during a seminar, they reflected the military's frustration with the rule of Morsi, Egypt's first freely elected president who completes one year in office on June 30.
Given the recent history of violent protests in Egypt, this could end up being quite ugly. In spite of the central bank's attempts to maintain currency stability, the Egyptian pound broke through 7.0, hitting a new record low.

USD/EGP (source:

Beyond the anticipated political protests, sectarian violence is threatening to become a problem.
Aljazeera: - Sunni Muslim villagers have killed four Shia Muslim men in Egypt after accusing them of trying to spread their version of Islam, according to security officials.

The four were beaten to death on Sunday in Giza province, near the capital Cairo, in one of the most serious sectarian incidents in Egypt in recent months.

The Health Ministry confirmed the death toll, adding that scores of Shias were seriously injured in the attack.

About 3,000 angry villagers, including ultraconservative Sunni Salafists, surrounded the house of Hassan Shehata, a Shia leader, threatening to set it on fire if 34 Shias inside did not leave the village before the end of the day, according to the officials.
The stock market is down some 17% for the year as investors fear escalation.

Egypt's stock market index (source:

It remains to be seen if the army will indeed intervene on a large scale during the protests or if this is a form of posturing.  June 30th is a week away.
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