CAIRO (Reuters) - Egyptian President Hosni Mubarak appointed a new interior minister on Monday as part of a revamped cabinet designed to defuse the most serious challenge to his rule in three decades.
Following are analysts' comments:
ZAINEB Al-ASSAM, HEAD OF MIDDLE EAST AND NORTH AFRICA FORECASTING, EXCLUSIVE ANALYSIS
The most likely scenario in the next seven days will be an escalation in protests, with a million strong protest planned for 1 February. If Mubarak appears to be staying then protests will continue after then, also initiated by a lack of basic foodstuffs such as flour.
In the event of Mubarak's resignation, the Muslim Brotherhood are well organised and would do well in any open electoral process. While the more moderate political wing of the Muslim Brotherhood will contain the more extreme elements in the group, they are close to Hamas and so increased war risks with Israel and increased terrorism risks in Israel (if border control lapses) are very likely.
In a year, Egypt would likely look more like Turkey and represent a moderately positive investment and risk climate. Even so, many existing contracts will be revised and challenged. There is likely to be some re-nationalisation in the manufacturing and industrial sector.
In terms of contagion risk, Yemen, Sudan, Jordan and Syria all look vulnerable. However, the greatest risk in terms of both probability and severity is in Saudi Arabia. A successor regime in Saudi Arabia would change the commercial as well as geopolitical environment across the region.
LUIS COSTA, EMERGING MARKETS STRATEGIST, CITI
"...We so far see weak prospects of a short-term consensus between opposition (led by the Muslim Brotherhood) and the government, when it comes to the establishment of a transitional government.
MURAT TOPRAK, EMERGING FX STRATEGIST AT HSBC
Egypt is an additional factor which is weighing on global sentiment, I do not think it is a main driver. There are some question marks about this crisis spreading towards other countries in the Middle East like Jordan or Lebanon. It probably also affects Israel but if you talk about GCC markets, the risk is contained.
In our view the likelihood of any instability in the GCC is very limited. The political and economic situation is very different. The reason behind the protests in Egypt is more about the economic situation."
MALCOLM GRAY, PORTFOLIO MANAGER OF INVESTEC AFRICA OPPORTUNITIES FUND AND INVESTEC FRONTIER INVESTMENT TEAM IN A NOTE
"Although not our central scenario, the likelihood of radical change has now increased. The events of the last few days have come as a shock, and investor sentiment has been severely dented. Our expectation is for an aggressive short-term sell-off in Egyptian listed assets when markets open in the coming days.
"We note that an aggressive sell-off may well prove a very attractive long-term buying opportunity. However this should be balanced with the consideration that the end result of the political instability is uncertain, and there is no guarantee of a continuation of the very successful economic policies of the last few years.
"We note that the risks have increased significantly in the short term, but hope that the events of the last few days will result in positive change in the long term.
(Compiled by World Desk +44 207 542 7939)
