Friday, July 05, 2013

Investor Reaction...

...Market Celebrates Egypt's Coup, But It's Not Over Yet
"The situation in Egypt has not been tenable since the Muslim Brotherhood and President Mohamed Morsi took over, post-revolution, but now that the military has stepped in, ousted Morsi and placed him in detention, foreign investors are celebrating."
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"Morsi and 35 other top Brotherhood figures are now the target of a military investigation and barred from leaving the country. In the meantime, an interim president—Aldy Mansour, head of the Supreme Constitutional Court—has been sworn in, and the military has cut off all communication outlets for the Muslim Brotherhood.

It doesn’t look good for Morsi, especially since Egypt’s new prosecutor general—General Abdel Maquid Mahmoud--is a figure that Morsi personally had deposed in his quest to get rid of any high-level dissent. So he’s got a big axe to grind."
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"Egypt’s EGX-30 (the country’s main index) rose 7.3% on the news of the coup, with the much-beleaguered Egyptian pound strengthening to 7.0264 to the dollar. It had reached a new low the day before the coup. The cost of insuring Egyptian debt against default also declined.

US crude oil futures rose to 14-month highs as oil bulls saw the chaos in Egypt raise the risk for oil and gas transit via pipeline through the Suez Canal. That risk appears considerably lower now that the military has acted decisively. (While oil production in Egypt is negligible at present, the country controls the Suez Canal.)"
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"In the longer term, we should be worried less about threats of Muslim Brotherhood protests—which the military could easily quash if they turned violent—than about reprisals from fringe Islamist groups, which would be doubly empowered should Qatar decide to support them as they have been doing in Syria.

On the political scene, watch the potential rise of Mohamed ElBaradei—former head of the UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA). ElBaradei is an opposition leader who has been waiting for the right opportunity, and he’s already been nominated by the Tamarod movement to become prime minister."
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"Qatar, of course, will call it a “coup” in no uncertain terms—at least in the backrooms. Publicly, it’s congratulated Egypt, but this tiny petro-monarchy which has been throwing cash at the Muslim Brotherhood in Egypt (and more recently Syria) is nervous. Qatar stands to lose the most without the Muslim Brotherhood in power. It was only a couple of weeks ago that Morsi had openly encouraged Islamists in Egypt to take up arms in Syria to fight the Assad regime, certainly at the prompting of its benefactor, Qatar."
The world's still in spin, but I have a good feeling about this one. If things go right, this could be a very, very significant turning point in history, as long as things don't spin so fast that Egypt gets dizzy.

PS: Don't forget to check out Big Pharaoh. His entry of today's date is really interesting.
"Yes it is a coup. However, it is a “coup but”. It is a coup supported by the largest gathering of Egyptians in human history. I am an Egyptian, I have been living here for all my life and I’ve never seen before what I saw this week. I have been involved in almost every major demonstration since the 2011 revolution, what I saw this week is staggering. The numbers, especially on June 30th, far exceeded the numbers of who participated in the January revolution to oust Mubarak. People from all walks of Egyptian life thronged squares and streets even if no demonstrations were called for. If you call this a coup without adding the “but” then you’re not seeing the full picture at all. After seeing the magnitude of the demonstrations and their geographical reach, I can comfortably conclude that June 30 and the days that followed reflected what the majority of Egyptians wanted."
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"It is understandable why many in the West cannot understand the legitimacy behind PLC. In the West, facets of democracy such as an inclusive constitution, human rights, inclusive politics, bills of rights and rule of law are taken for granted. Elections is the only facet they practice every 4 or 5 years. In Egypt, we just had one facet of democracy, elections, and the Brotherhood deprived us from all the other facets that Westerners take for granted.

President Obama was right when he told Morsi in their final telephone conversation that “democracy is more than elections”. Unfortunately, the advise was too late. Toppling elected regime happened before, especially in Argentina, Egyptians this time sought the help of the only state institution they trust: the army."
Emphasis mine.

And here's an interesting round-up of how other Middle Eastern countries are reacting to events in Egypt.

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