Egyptian market plunges after opening
JEREMY HOBSON: Now let’s get to the Egyptian stock market. It reopened today for the first time since the uprising there. Stocks plunged almost 10 percent and trading was halted again.
As we continue our coverage of the economic consequences of the changes in the Middle East, let’s go live to Richard DeKaser, economist with the Parthenon Group. Hi Richard.
RICHARD DEKASER: Good morning.
HOBSON: So does it really help to keep a stock market closed for two months if when you open it, it’s going to drop like this?
DEKASER: No I don’t think so. The standard argument is that you provide a pause if markets are assimilating information quickly and efficiently. You give people time to absorb new information, and with that information, people behave more rationally.
HOBSON: Do you think that now they have the information, are things more certain now in Egypt than the were a couple months ago?
DEKASER: I would argue that they are not. We have some certainty on the political situation. Mubarak — his regime is over, and some form of representative democracy is going to be taking shape, but economic uncertainties are still enormous. The military was a major force in Egyptian economy and there are signs that maybe they’re even rolling back than advancing reforms. And certainly if we look around the neighborhood, tumult is everywhere in the Middle East. Its neighbor Libya and not so far away Yemen are arguably in some form of revolution. So I would say uncertainty is not diminished overall.
HOBSON: Richard DeKaser, economist at the Parthenon Group, thanks so much as always.
DEKASER: My pleasure.
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