Egyptian Stock Exchange put on hold in wake of protests
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Egyptian Stock Exchange put on hold in wake of protests
Steve Chiotakis: One place where the markets aren’t trading today is Egypt. Tens of thousands of Egyptians are again protesting in Tahrir Square in central Cairo, wanting the military leadership there to give up power. The political unrest has sent the Egyptian Stock Exchange tumbling — matter-of-fact, it dropped so far, so fast that trading was suspended.
Angus Blair is head of research at investment bank Beltone Financial. He’s with us from Cairo. Thank you for being with us, sir.
Angus Blair: Hey, how are you?
Chiotakis: I’m doing well. What’s going on in Egypt today? Why the stock market shutdown?
Blair: Well, you have to put it in the context of, it looks very much like we’re back where we were in January in the times of Mubarak, with now it looks like several hundred thousand people in the square, with more likely to arrive after work tonight to make the point that they want further changes in the governance of Egypt.
And that insecurity — as you would have anywhere in the world, whenever there’s some kind of instability, the stock market falls. Because obviously the economy’s slowing, people will spend less. A number of tourist companies have cancelled flights for a few days to see how things are. So all of that means that investors are looking to get out in the short-term, and just wait and see what will happen in the markets in the next few weeks.
Chiotakis: You said people gathering in the square — what kind of shape is Egypt’s economy in at the moment?
Blair: Economic growth is running, say, about 1 percent a year — which is not good enough in an emerging market with strong growth in population. Inflation’s quite high, about 12 percent year-on-year. But there are still some good signs: we’ve had some companies producing, earning as much as 25 percent, some consumer companies.
But in general, it’s quite difficult with fallen international reserves, and with high budget deficits — about 9 percent of GDP — and a trade deficit that needs finance too. So, quite bad general macro numbers to add to the general political story here in Egypt.
Chiotakis: What’s it going to take to get the economy going in Egypt again?
Blair: Well, this is a kind of wishlist. I would say that you would want a national unity government where the military has said it will stand down and allow them a technocratic cabinet to put in place a real and relevant time table for elections. And then have a presidential vote by spring of next year, because the military will try to delay this up until 2013.
Chiotakis: Angus Blair from Beltone Financial in Cairo. Mr. Blair, thank you.
Blair: Thank you.
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