DUBAI: Egypt’s parliamentary elections produced an overwhelming victory for President Hosni Mubarak’s ruling party, but voting was marred by a low turnout and opposition complaints of fraud and bullying, raising political risk worries among foreign investors.
Yet the country’s buoyant economy should help it remain an attractive destination for emerging market funds.
The Muslim Brotherhood said it had won no seats in Sunday’s first round of a vote it said was rigged, and decided that it’s candidates — along with candidates from Al-Wafd opposition party — would not take part in the Dec. 5 runoff elections.
"Reports of alleged abuses do raise political risk," said Angus Blair, Beltone Financial head of research in Cairo.
"If reports are true that neither the Muslim Brotherhood nor the Wafd party won any seats it will be worrying — Egypt needs a pluralistic parliament. The alternative is more dissent."
The Brotherhood is the main rival of the ruling National Democratic Party (NDP) and its candidates run as independents to escape a ban on religious parties.
"There are a lot of reformers in the NDP who are committed to change and the absence of opposition MPs will not help them either," said Blair.
Charges of ballot stuffing, bullying and other trickery marred Sunday’s vote. The government said the election was fair, with a state-linked body estimating a quarter of the 41 million registered voters cast ballots, although an opposition group said turnout was as low as 10 percent in the constituencies it monitored.
The parliamentary elections may indicate how the government will conduct the 2011 presidential election. Hosni Mubarak has been in power since 1981 and has yet to state whether he will run again.
"Next year will be very interesting politically because a lot of people in business are becoming increasingly frustrated at the lack of political pluralism in Egypt," said Beltone’s Blair.
Egypt’s economy is forecast to grow 5.5 percent in 2010/11, according to analysts polled by Reuters, while Cairo’s main stock index is up nearly 8 percent this year, second only to Qatar in the Middle East.
"Egypt’s Q3 earnings were fine — economic growth is good, there is very high domestic liquidity and strong local demand, which is why foreign investors like Egypt," said Blair.
State bureaucracy, while less onerous than before, continues to constrain economic growth, he added, but manufacturing receives significant foreign investment.
Market volumes sagged before the parliamentary elections and trading is expected to remain lackluster until the vote runoff.
