Egypt's main share index drops 3.4 percent to its lowest since 26 January, extending a decline after a weekend presidential election brought the country no closer to the stable democracy promised by its interim military rulers.
Hours before the Muslim Brotherhood said its candidate had defeated Hosni Mubarak's last prime minister in the election, the generals issued a decree that set strict limits on the new president's powers.
The Supreme Council of the Armed Forces (SCAF), which has pledged to hand power to an elected civilian by 1 July, had already dissolved the Islamist-led Parliament. Its liberal and Islamist opponents denounced a "military coup.”
Economists said the deepening political standoff only makes it harder to drag the country out of an economic malaise and attract sorely needed aid from foreign donors. The International Monetary Fund wants to see a political consensus on economic reforms before releasing an emergency aid package.
"How can you possibly make these huge economic decisions in such circumstances?" says Exotix economist Gabriel Sterne. "Such events as these only serve to undermine confidence and accelerate capital flight."
Orascom Telecom Media and Technology dips 2.3 percent, investment bank EFG Hermes 4.9 percent and Orascom Construction 5.4 percent.
The uncertain outcome of the weekend vote, billed as the last step in an army-managed transition to democracy, is the latest in a series of false starts that have investors swinging between optimism and despondency since the overthrow of autocratic leader Hosni Mubarak in February last year.
Sixteen months since Mubarak's departure, the country lacks a functioning government with popular backing to enact reforms needed to kick-start investment in a struggling economy.
After posting the world's best stock market performance between January and March following a smooth parliamentary vote, the EGX30 index has dropped 20 percent.
"There is a bit more uncertainty now. We have a new president but it means nothing because he has nothing to do. I don't think we will have a huge sell-off, but there will be some sellers," says Teymour el-Derini, trader at Naeem Brokerage.
