Reply #4: Egypt Not Iran 1979 as Mideast Financial Stability Buoys Markets [View All]

[Pale Blue Dot]

Egypt’s turmoil is having limited impact on global financial markets, where investors see few parallels with Iran’s 1979 revolution or the contagion that followed Thailand’s meltdown 13 years ago.

World equity-market capitalization climbed to $53.6 trillion this week, the highest level since June 2008, even as protests against Egyptian President Hosni Mubarak’s 30-year rule intensified and forced the nation’s bourse and banks to close for a fifth day. Dubai’s equity index rose the most in nine months yesterday and emerging-market bonds rallied, according to data compiled by Bloomberg.

While the uprising in Iran three decades ago sparked a 140 percent surge in oil and Thailand’s devaluation led to a global equity selloff, Egypt has about 0.3 percent of the world’s crude reserves and its foreign-currency holdings exceed overseas debt by $29 billion. Traxis Partners LP’s Barton Biggs says it’s a mistake to sell shares because of Egypt’s crisis, while Pacific Investment Management Co.’s Mohamed El-Erian sees signs of a “reconciliation” in the most-populous Arab country.

“The one thing to avoid is to exaggerate the probability for chaos,” El-Erian, the son of an Egypt diplomat and chief executive officer at Pimco, which oversees about $1.2 trillion worldwide, said in a Feb. 1 interview on “Bloomberg Surveillance” with Tom Keene. “There’s a lot of talk of ‘what if Egypt becomes Iran?’ I don’t think that’s the case.”

http://www.bloomberg.com/news/2011-02-02/egypt-not-iran-1979-as-mideast-financial-stability-buoys-markets-worldwide.html