CAIRO: In the midst of violent clashes between Egypt’s security forces and protesters demanding a transfer of power from military to civilian rule, businesses are bracing for the impact of what some have called the second wave of the revolution.
Several local and international businesses across Cairo are comparing this week’s violence to the turmoil of the 18 days, which began January 25 and ended by ousting Hosni Mubarak.
Many investors have fears that the country’s economy, which was in peril as a result of the winter uprising, might now further deteriorate.
Until Tuesday, the stock market had lost LE 29 billion, but regained some losses on Wednesday as the benchmark index closed up 1.1 percent.
“Things were uncertain already. Foreign investors, as well as local investors, were sort of in a wait-and-see mode — what has happened over the past four days has certainly intensified this mentality,” said Karim Helal, a board member of Cairo-based investment firm CI Capital.
“This has thrown even more concerns and ambiguity at us, the immediate short-term effect is that this will be bad for business, the fog we saw before is now stained with blood,” he said, referring to the clashes between protesters and security forces, which have left more than 30 dead and hundreds injured.
Amr Abu Shullaih, co-founder and CEO of Concord Construction Materials, said his company, which produces raw materials of ready-mix concrete, had already been seeing a slowdown before the Eid holidays, adding to the woes of the ailing real estate sector.
Before the January 25 revolution, the company was sending out around 500-600 cubic meters per day, but as a result of the political unrest, there were days when they were only producing as little as 12-20 cubic meters of ready-mix concrete.
Now, however, as a result of what he calls the “second wave of the revolution,” Shullaih predicts business will be practically “non-existent.”
“This month, as a result of these events, we will see a loss of about LE 40,000 to LE 50,000,” he said.
On the other hand, Ahmad Hassan, co-founder and director of Tycho, a branding agency which handles branding for international and local companies, has fears of what will happen over the next weeks.
“I cannot tell you that the past few days have affected anything yet, it is the anticipation of what is going to happen, everyone is afraid, everyone is thinking that this is the same scenario that happened during January 25,” he said.
Although nothing major for the company has been ultimately cancelled, Hassan said that out of fear, some clients are postponing payments and business meetings due to the violence.
“Several clients have postponed payments and meetings, there are no actual losses yet, but everyone is on a state of alert, local clients especially are telling us they want to wait and see what happens. After this Friday for example, where another million-man protest is planned, everyone is worried,” he said.
Moreover, Monette Doss, a senior research analyst at Prime Group who focuses on the banking sector, said banks share similar concerns, despite a drop in share prices which should actually encourage investors to buy into the market.
“The violence taking place was expected during elections, but what we are seeing now is a second wave of the revolution and, that was not expected,” she said. “We expected that elections violence would naturally have adverse effects on the stock market.
“This downturn in the stock market and share prices, in my opinion, makes it a good time to buy shares in banks. Prices have dropped drastically and the current market prices already take into consideration the very worst possibilities, so that is why it makes it a good time to buy shares in banks.”
During the winter uprising this year, banks closed for one week during the initial violence, opened, then shut down again for another week after workers’ protests.
“It is very hard to predict what could happen at this point, everything is possible, it is a very big possibility that banks could close again, you never know what could happen,” Doss said.
Several companies including Yahoo and Kraft were planning to hold events over the upcoming days, but all have indefinitely cancelled in light of the recent events. Business conferences and exhibitions as well as some sporting and cultural events have also been canceled.
Yahoo, for example, was planning a summit this week called “Changing World” where they were planning to discuss human rights and the role of the media in the revolutions.
According to Waleed Amin, an office manager at Hill and Knowlton, a full-service public relations and public affairs consultancy firm, the event was postponed.
Other events, however, have been cancelled altogether, costing companies thousands of dollars.
