Sinai violence sends stocks tumbling Monday

Renowned Egyptian economist Mohamed al-Erian warned on Monday that continued violence in Egypt would hamper national reconciliation efforts and hinder economic recovery, the state-owned Middle East News Agency reported, quoting an interview Erian conducted with the US-based cable news channel CNN.

Erian, who is the CEO of the Pacific Investment Management Company (PIMCO), further cautioned that despite the flow of economic aid packages from Gulf countries, Egypt still suffers from dire economic challenges due to political instability.

The US$12 billion aid package from the Gulf would not prevent the suffering of Egypt’s poor in the face of this instability, he added.

After climbing to a high around 10:40 am, the principle stock index EGX 30 dropped late Monday morning following news of violence in Sinai, which reportedly left 25 soldiers dead. A slow recovery then began that continued into the afternoon.

The banking and telecom sectors were the hardest hit in Monday’s trading.

Erian described the situation in Egypt as "saddening and tragic," expressing deep concern that the country was on the brink of a civil war.

The problem isn’t just the victims who are slain every day in the nation's streets, but also the fact that Egypt is moving further and further away from economic and social stability, Erian asserted.