CAIRO: Egypt s Investment Minister said on Monday the Dubai debt crisis would have a limited effect on the Egyptian economy, which he said had no direct exposure to conglomerate Dubai World s debt. Egypt s stock market recorded its biggest daily loss in 13 months on the first day of trading after Dubai spooked markets globally with a call for a delay in the conglomerate at the heart of its economic boom repaying billions of dollars in debt. Analysts said they believed Egypt, which has emerged from the world financial crisis relatively unscathed, would be little affected by the Dubai debt fallout and that the decline in share prices would be short lived. Fund managers said last week money could rotate out of Dubai and into safer regional havens, including Egypt. The direct effect on the Egyptian economy is expected to be limited ... The Egyptian economy and Egyptian institutions are not directly exposed to the debt of Dubai World, Investment Minister Mahmoud Mohieldin said in a statement. The statement was released after Mohieldin met the heads of Egypt s stock exchange, the General Authority for Free Zones and Investment and the Egyptian Financial Services Authority regulator to discuss the Dubai crisis. The market of course will crash, because Egypt tends to follow and it s gotten much closer to the US index, said Mark Rorison, head of research at CI Capital, adding Egypt s economy was led by local consumption and state and private investment. The main risk is that it will be harder to get FDI (foreign direct investment) from the GCC, he said. The six-state Gulf Cooperation Council includes the United Arab Emirates. Material impact Trade Minister Rachid Mohamed Rachid told reporters late on Sunday the Dubai crisis would not affect UAE investments in Egypt, but warned it could harm Egyptian investments in Dubai. It will have an impact on the Egyptian companies that work in Dubai like construction, services, accounting and legal companies, Rachid said. Egyptian firms lined up to say they had little exposure to Dubai, and Beltone Financial said that while it was bearish on Dubai prospects it remained positive for Egyptian stocks. Egypt s top listed builder Orascom Construction Industries said it saw little material impact. OCI said it had cancelled $200 million in projects in the UAE in early 2009 that were concentrated in Dubai, and would now focus its UAE operations on oil-exporting Abu Dhabi. We now have limited exposure in Dubai, Investor Relations Manager Omar Darwazah said. The situation in Abu Dhabi in general is very healthy versus Dubai. El Sewedy Cables, the largest Arab cable maker by market value, said it had almost zero exposure in Dubai. Commercial International Bank said it also had no exposure to Dubai World or its subsidiary Nakheel. In a possible spillover from Dubai, Egypt s central bank on Monday scrapped a 182-day Treasury bill auction. The central bank gave no reason for the cancellation, which is not uncommon, but treasury dealers said they believed the offers for the paper may have come in too high, with one saying it was likely due to a knock-on effect from the Gulf. -Additional reporting by Patrick Werr and Sherine El-Madany.
