Wary Investors Eye Egypt Strife, Saudi King

Investors will look to developments in Egypt as President Mohamed Morsi meets senior judges on Monday to ease the crisis over his seizure of new powers that set off violent protests and a crash on the stock market.

Morsi issued a decree late on Thursday temporarily widening his powers and shielding his decisions from judicial review, drawing accusations he was behaving like a new dictator.

Cairo’s benchmark plummeted 9.6 percent on Sunday, nearly the maximum allowed move in a day of 10 percent and trimming 2012 gains to 35.8 percent.

Brent crude is trading above $111 a barrel on oil supply concerns from Egypt, along with brightened outlook for oil demand from Europe as hopes Greece can avoid a near-term bankruptcy increase.

“Egypt has a political risk factor, which will affect sentiment in the short-term,” says Marwan Shurrab, vice-president and chief trader at Gulfmena Investment. “It has rallied aggressively after the revolution – a sell off like yesterday is expected.”

Investors said protests in Egypt were affecting sentiment across the Gulf region. Saudi Arabia’s measure fell 2.1 percent to a 10-month low on Sunday.

Analysts say concerns over the king’s health are also weighing on the Saudi bourse.

Senior Saudi royals and government officials have visited King Abdullah in hospital, state news agency SPA reported, a week after the monarch – believed to be in his late 80s – had surgery to tighten a ligament in his back.

“If we have clarity on political change in Egypt and confirmation on the king’s health, we could get stability back in the two markets,” Shurrab adds.

Global markets are keeping their focus on Europe as hopes Greece can avoid a near-term bankruptcy brightened. Asian shares inched up on Monday. Euro zone finance ministers will meet later in the day. Markets expect an agreement will be reached soon to disburse aid for Greece.

Arabianbusiness