2011 the year that was: January 25th-The Day of Rage
December 18, 2011 3:02 by p.deleon
When we think of January 2011, the first thing that pops into our minds is the day of rage organised on January 25th in Egypt. The protests staged on that day where instrumental in ousting the Mubarak regime—but it also marked the beginning of some economically de-stabilising times here in the Middle East. Which is why, our story of the month is this special feature Kipp published two days after the day of rage:
Egypt unrest may hit Middle East, Africa investment
January 27, 2011
Egypt could be catalyst for MENA investment withdrawal; Youth unemployment, inflation potential flashpoints; Gulf markets, longer-term prospects still seen positive.
Mass protests in Egypt, one of the darlings of African and Middle Eastern investors, sharply increase the risks that international investors will withdraw funds from some other economies in the region. Fund managers were relatively sanguine about the upheaval in Tunisia which drove President Zine al-Abidine Ben Ali to flee earlier this month, as Tunisia is a frontier market which doesn’t feature on many portfolio managers’ radar screens.
But they did then point to the potential for contagion across parts of the Middle East and North Africa (MENA), with Gulf markets seen as relatively insulated, but Egypt an especially big risk.
That contagion appears to have started.
“The more tension that develops in the Middle East and Africa, the more readily investors will choose safety over capital gains, and thus eschew investments in the area,” said Tom Dorsey, president at investment advisers Dorsey, Wright & Assoc.
“Cash is preferable over equities in Egypt today, and that will be my path until the markets suggest otherwise.”
“One of the risks in the region is destabilisation in politics,” said Ghadir Abu Leil-Cooper, head of emerging equities at Baring Asset Management, whose MENA fund is invested in Egypt.
“In Egypt, we are not there with regime change. Am I watching it very closely? Yes. Do I know the outcome? No. Do I think that Egyptian asset prices look attractive? Yes, but there is no reason to rush into them.”