Egyptian assets sold off and oil prices rose Thursday after violence escalated in Cairo and political turmoil gripped the country.
Egyptian assets sold off and oil prices rose Thursday after violence
escalated in
Cairo
and
political turmoil gripped the country.
At least 525 people have been killed in
Egypt
's
latest wave of violence, after a bloody crackdown Wednesday on Muslim
Brotherhood supporters who had occupied protest camps in
Cairo
and
called for the reinstatement of President Mohamed Morsi.
Egypt
's
interim government announced a month-long, national state of emergency, and the
country's stock exchange was closed Thursday.
Egypt
's
most heavily traded dollar bond weakened, while the cost to insure Egyptian
debt against default rose. Analysts expect that
Egypt
's
stock market may free fall whenever it reopens.
"Once the market is going to open, it's going to crash," said Souheir
Asba, frontier market strategist at Societe Generale in
London
.
Amid concerns about
Egypt
's
paralyzed economy, the spread on
Egypt
's
five-year credit default swaps rose to 803 basis points from 770 basis points
the previous session, according to data provider Markit.
Egypt
's
2020 dollar bond slipped to trade at 85.6710 cents on the dollar Thursday, from
86.7259 the previous session, according to Markit. The bond currently yields
around 8.61%.
However, the Egyptian pound was steady on the day against the dollar, though
likely in thin trading. The dollar bought EGP6.9915, according to CQG.
One factor that may be muting traders' reaction to the turmoil is that many
foreign investors have already fled
Egypt
this
year, particularly when protests against Mr. Morsi heightened and expectations
for an immediate lifeline from the International Monetary Fund waned, analysts
said.
"Everyone's left now already," said Neil Shearing, chief economist at
Capital Economics.
He said funds from
Egypt
's
neighboring countries have helped replace those missing private capital
inflows, but warned that investors should still expect further disruptions in
the local economy.
"The clear point is, the economy's still struggling," he said. "It's
quite clear that ordinary Egyptians are the ones that are going to feel the
squeeze because of this."
Egypt
's EGX
30 stock index fell 1.7% Wednesday to close at 5549.19. The index is still up
1.6% so far this year.
The rising death toll in
Egypt
also
reverberated across the global oil market. Brent crude-oil futures shot to a
four-month high Thursday, with traders increasingly worried about the prospect
of supply disruptions, particularly at the
Suez Canal
, a
critical conduit for Middle Eastern oil.
"You have a lot of the Saudi oil that actually goes through pipelines
through
Egypt
,"
Ms. Asba said. "Everything that goes through the
Suez
Canal
can be impacted."
Oil futures notched a fifth straight session of gains after the Egyptian
government confirmed that the death toll in
Egypt
rose
to at least 525 after Wednesday's bloody crackdown.
Brent crude for September delivery rose 97 cents, or 0.9%, to $111.17 a barrel
on the ICE Futures Europe exchange. Earlier, it rose as much as $1.33 to
$111.53, the highest price since April 2.
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