GO
Loading...

Egypt on edge as Mursi trial adjourned

The trial of ousted Egyptian president Mohamed Mursi was adjourned following a short court session in a tense Cairo on Monday, putting security forces on high alert but leaving investors unworried about the possibility a renewed wave of protests and instability.

"We do not anticipate that there will be large protests around the Mursi trial, given that large-scale Muslim Brotherhood protests have been dying down," Angus Blair, Founder of the Signet Institute, a Cairo-based think tank, told CNBC.

Mursi is being charged with inciting violence, a count which if convicted can carry a life sentence or even the death penalty. His trial is set to resume on January 8 after 14 other defendants disrupted proceedings by calling for an end to military rule.

(Read more: Egypt on path towards democracy: John Kerry)

Egypt's benchmark stock exchange EGX30 closed 0.57 percent higher in Monday trade and has rallied 13.9 percent so far this year.

Shootouts and bomb attacks by what the government describes as terrorists have become a regular occurrence, especially in the Sinai Peninsula, although canal shipping activity has remained unaffected.

But investors and analysts are not expecting any sharp escalation in violence.

"Protests will be contained because public opinion is already extremely mobilized against the Muslim Brotherhood," Hany Genena, Head of Research at Pharos Securities, agreed. "Regardless of sporadic acts of violence, investors are apparently discounting the noise and behaving as usual".

Egypt's troubled economy got a boost from oil-rich Gulf states, spearheaded by regional powerhouse Saudi Arabia. The countries have pledged $12 billion in aid, refilling the dwindling foreign currency coffers of the Central Bank. In the four months following the collapse of Mursi's government, the Egyptian Pound has appreciated marginally from all-time lows.

In its latest research note however, HSBC underscored the trial, and a redrafted constitution in the pipeline, meant there was "risk of renewed political volatility".

On November 1, the Central Bank on Thursday kept rates on hold following a series of cuts, citing a "mixed balance of risks surrounding the inflation and the GDP outlooks at this juncture".

Meanwhile, Secretary of State John Kerry visited Cairo on Sunday, and urged the transition to democracy to continue, but made no mention of Mursi. It is the highest-level US delegation to visit the country since the Muslim Brotherhood leader was deposed on July 3.

"The roadmap is being carried out to the best of our perception," he told reporters at a press conference.

(Read more: Egypt seen as graveyard of Islamist ambitions for power)

Egypt's army-backed government is mandated to oversee the transition to civilian rule with parliamentary and presidential elections expected next year. US-Egyptian relations have deteriorated in recent months, exacerbated by the US administration's decision to suspend a large chunk of its $1.5 billion annual assistance program that has underpinned the relationship for just over three decades.

"Any form of political transition in Egypt is difficult given the many issues which require addressing. The cabinet is doing its best, although I would like to see a few more creative minds in the cabinet," Blair added.

Several high-profile Egyptian politicians have supported the idea of General Abdel Fattah El-Sisi, the army chief, to run for president.

Contact Politics

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More