The announcement that Egyptian President Hosni Mubarak has resigned offered new hope for a rebound in waning investor confidence in the country, with the cost of insuring Egypt's sovereign debt retreating sharply. But analysts and economists cautioned that other question remained, such as the pace of reform and what role the military would play.
Friday's announcement by Vice President Omar Suleiman came a day after Mubarak appeared on state television refusing to resign and saying that instead he was transferring powers to his deputy. Those remarks had stunned and outraged the masses who had been demanding his ouster for almost three weeks. Mubarak's exit Friday signaled an apparent end to the impasse that many had feared would descend into violence and cripple the country politically and economically.
"It's a move definitely toward the right direction," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi Fransi. "But what we still don't know is exactly the direction that we're taking or the steps to get there."
In an indication of the easing of investor angst, the country's five-year credit default swaps dropped 24 basis points to 313 basis points, according to CMA data. Meanwhile, the Market Vectors Egypt Index ETF — which allows investors to invest in Egyptian stocks — gained almost 6.7 percent to almost $19.
But questions remained about the next steps after the resignation, including the pace of reform, the role of the military — which has so far been seen largely siding with Egyptians — and whether protesters would continue to press for the dismantling of Mubarak's regime, including the Cabinet and other entrenched leaders.
Wael Ziada, head of Egypt research at the Cairo-based Mideast investment bank EFG-Hermes, said the news should help "restore confidence because it means the country is approaching a more-or-less stable state."
But, he said, "We need to know how the military will be ruling the next period."
Even so, the announcement was a rare bit of good news for millions in a nation that had seen the economy grind to a standstill in the first week of the demonstrations.
As banks closed, businesses were shuttered and lawlessness broke out, tensions built over the past 18 days in an outpouring of protester vitriol directed against a man who had ruled Egypt for nearly 30 years.
Even before Suleiman's announcement, it was unclear whether the Egyptian Exchange would reopen as scheduled on Sunday after a two-week closure. The market's benchmark EGX30 index had dropped almost 17 percent in two consecutive trading sessions before it closed on Jan. 28.
Also in question was whether the Egyptian pound might endure another pummeling or whether foreign capital outflows would continue and at what pace.
Initial indication offered an upbeat assessment.
The Dow Jones Industrial Average reversed an earlier slide and was up 12 points while European markets also drifted higher. Oil prices also dropped, with the U.S. benchmark crude futures contract for March delivery dropping $1.21 to $85.52 in midday trading on the New York Mercantile Exchange. In London, Brent crude fell 31 cents at $101.13 on the ICE Futures Exchange.
The wide spread between the two benchmarks had been at least partially cemented by concerns that unrest in Egypt could affect Suez Canal traffic and spill over to other countries in the oil rich Middle East.
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