Almost US$4 billion (Dh14.69bn) was wiped from the value of Egyptian shares as markets reacted for the first time to the expansion of powers by the president Mohammed Morsi on a dire trading day quickly dubbed "Black Sunday".
The stock market suffered its sharpest intraday drop since last year's revolution, after clashes broke out in Cairo's Tahrir Square overnight.
Judges have called for a strike in protest against the decrees, which were announced on Thursday, that put the president's powers beyond judicial review.
With tension rising in the country yesterday, the EGX30 Index sank 6 per cent upon opening, resulting in a half-hour trading suspension.
The halt did little to calm brokers' nerves when trading resumed, however, with the market measure closing down 9.5 per cent at 4,917.73, its lowest level in four months.
In a nod to Wall Street's 1987 Black Monday crash, yesterday was immediately dubbed Black Sunday by Egyptians using the social networking site Twitter.
"We're not the same Egypt. Investors know that Morsi's decisions will not be accepted and that there will be clashes on the street," Osama Mourad of Arab Financial Brokerage told Reuters.
Orascom Construction Industries, Commercial International Bank and Orascom Telecom Holding led markets lower, with not a single stock rising.
Egypt's borrowing costs rose to the highest level in six weeks at an auction of treasury bills by the central bank. The government raised 3.5 billion Egyptian pounds (Dh2.09bn) through the sale of nine-month bills with an average yield of 13.19 per cent.
Violence returned to Tahrir Square, the focal point of the revolution that overthrew Hosni Mubarak from the presidency in February last year, as protesters clashed with security forces on Saturday night.
Opposition groups have called for 1 million people to march tomorrow against Mr Morsi's assumption of increased powers.
Underscoring the fragile situation, bomb blasts hit two security bases in the Sinai peninsula on Saturday, Reuters reported. The blasts injured three people.
Last week, Egyptian investors breathed a sigh of relief after the country's government said it had reached a $4.8bn standby agreement with the IMF, after more than a year of talks.
Egypt's generals had previously turned down a $3bn rescue package in June last year. Since then, the country's foreign reserves had dwindled steadily.
The announcement of a ceasefire agreement between Israel and Hamas, ending the seven-day conflict in Gaza, also helped to drive a substantial relief rally last week.
But Mr Morsi's move could exacerbate existing divisions among Egypt's fractious political factions, said Alia Moubayed, the regional director of research at Barclays Bank.
"The expansion of presidential powers may be perceived of investors as deepening the political divides which may threaten social peace and undermine economic stability and therefore raise Egypt's risk premium," she said.
"There is also perception that such a step aggravates the confrontation between the executive and the judiciary, undermining the latter's independence and threatening legislative stability." It is unclear whether Mr Morsi will reverse his position, Ms Moubayed added.
"The lack of clear exit strategy or national dialogue to address the grievances of various political factions does not bode well for a quick resolution of to the current political deadlock, but ultimately Egyptians are bound to find a way to resolve their differences to move forward with their transition."
Adding to the gloom on regional markets, the Saudi Tadawul All-Share Index fell 2.1 per cent to 6,524.15, a 10-month low for the Arabian Gulf's biggest market.
ghunter@thenational.ae
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The specs: 2018 Kia Picanto
Price: From Dh39,500
Engine: 1.2L inline four-cylinder
Transmission: Four-speed auto
Power: 86hp @ 6,000rpm
Torque: 122Nm @ 4,000rpm
Fuel economy, combined: 6.0L / 100km
Look%20Both%20Ways
%3Cp%3EDirector%3A%20Wanuri%20Kahiu%3Cbr%3EStars%3A%20Lili%20Reinhart%2C%20Danny%20Ramirez%2C%20David%20Corenswet%2C%20Luke%20Wilson%2C%20Nia%20Long%3Cbr%3ERating%3A%203%2F5%3Cbr%3E%3C%2Fp%3E%0A
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
The Great Derangement: Climate Change and the Unthinkable
Amitav Ghosh, University of Chicago Press
German plea
Ukrainian President Volodymyr Zelenskyy told the German parliament that. Russia had erected a new wall across Europe.
"It's not a Berlin Wall -- it is a Wall in central Europe between freedom and bondage and this Wall is growing bigger with every bomb" dropped on Ukraine, Zelenskyy told MPs.
Mr Zelenskyy was applauded by MPs in the Bundestag as he addressed Chancellor Olaf Scholz directly.
"Dear Mr Scholz, tear down this Wall," he said, evoking US President Ronald Reagan's 1987 appeal to Soviet leader Mikhail Gorbachev at Berlin's Brandenburg Gate.
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Company%20profile
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Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
SPEC%20SHEET%3A%20APPLE%20IPHONE%2015%20PRO%20MAX
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COMPANY%20PROFILE
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Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
