A long-awaited announcement on Sunday afternoon declared Mohammed Morsi, the candidate of the Muslim Brotherhood’s political wing, as the winner of Egypt's first free presidential election. But the revelation is unlikely to bring swift clarity to a muddled political arena, or confidence to nervous investors, as presidential powers remain ambiguous, parliament is dissolved and a constitution has yet to be written.
Protestors, who had once again gathered in Cairo’s iconic Tahrir Square, reacted with a sense of relief to the news, but vowed to stay until the military had relinquished transitional powers. Additional security was deployed across the capital ahead of the announcement.
Running for the influential the Freedom and Justice Party (FJP) Morsi garnered 52 percent of the vote, edging out Ahmed Shafik, a former Commander in the Egyptian Air Force and Hosni Mubarak's last Prime Minister. Shafik tailed Morsi by less than 300,000 votes in the first round last May.
Turnout, which surprised in the first round with only 46 percent of just over 50 million eligible voters, increased marginally to 51.8 percent, the election commission said.
Shadi Hamid, Director of Research at the Brookings Doha Center, saw Morsi’s win as marking the beginning of a protracted battle between the Muslim Brotherhood and a military unwilling to budge from its power base.
“Who wins that battle will depend on how united the opposition is and whether they can forge a united front against SCAF’s [Supreme Council of the Armed Forces] domination of politics,” he told CNBC.
Initially fueling widespread anxiety were victory pronouncements by both candidates. Official results had been slated for last Thursday, but the election commission decided to wait until an investigation into objections filed by both candidates was complete. As the unease over intentions grew, even US Secretary of State Hilary Clinton insisted it was “imperative that the military fulfill its promise the Egyptian people to turn power over to the legitimate winner”.
In the 530 days since Hosni Mubarak was toppled, the country’s economy, formerly a popular destination for foreign investors, has taken a major hit. The policy ramifications of a Morsi win were still difficult to ascertain.
“Although a Morsi victory would be limited by SCAF, it would nevertheless be an endorsement of the Arab Spring, although its goals might take longer to achieve than was hoped,” Dr. Maha Azzam, Associate Fellow, Middle East and North Africa Program at Chatham House, said in a note on Friday.
The political fray has delayed the conclusion of much-needed external financing, led by a $3.2 billion from the International Monetary Fund. It has also weighed on foreign currency reserves, weakening the Egyptian Pound and convincing many analysts that a devaluation is inevitable.
Government borrowing costs have been rising as well, with sluggish demand at a bond auction on Thursday. The average yield on 182-day Egyptian treasury bills rose to 15.492 percent, the highest in more than a decade. The extent of rising risk perception was also evident in the cost of insuring Egyptian debt for five years, which rose by another 29 basis points to 679 on Friday, according to data from Markit. It is the highest level since March 2009.
Egypt’s stock exchange, the EGX30, closed higher on Sunday ahead of the results announcement. The Market Vectors ETF in the U.S., another popular route for foreign investors to secure exposure to Egypt, closed 0.48 percent higher on Friday. It has lost over 20 percent in the three months leading up to the final round of the presidential contest.
Yousef Gamal El-Din is CNBC's Middle East Correspondent and contributes to the channel’s flagship shows, as well as analysis for CNBC.com.
Stay in touch with him on Twitter at http://www.twitter.com/youseftv @youseftv