Protesters flee army violence on Sunday night in Cairo (by Mohammed Hossam / AFP)
Egypt's benchmark EGX30 index fell by 5 per cent in the opening minutes of trading on Monday, causing a half hour suspension in trading. The index recovered somewhat on reopening, but remains down 3 per cent at pixel time, and down 44 per cent in 2011.
Source: Egyptian Stock Exchange
The fall was sparked by the worst violence to hit Cairo since the resignation of Hosni Mubarak in February. There have been plenty of nasty moments in the eight months since the revolution, from rising street violence to government incompetence, flare-ups on the Israeli border, major security lapses and the attack on the Israeli embassy.
But even by these grim standards, Sunday night was by far the darkest, with at least 23 Egyptians dead, most at the hands of the army, which opened fire on a protest in central Cairo. The violence was made more foreboding by its sectarian character: the protesters were mainly Christian, demonstrating against attacks on churches, and the army was aided by Egyptian state media urging the country's Muslim-majority population to take to the streets and defend the army against Christian aggression. Reports emerged of gangs of armed civilians roaming the streets in search of Christians, chanting slogans like "Islam is here".
The scenes were unprecedented in recent history, and painted the possibility of Egypt degenerating into a more fragmented country in conflict with itself - an Iraq or Pakistan scenario that even pessimistic Egyptians and onlookers would have dismissed just months ago.
The country's cabinet, military chiefs and religious leaders are taking part in emergency meetings on Monday in an attempt to diffuse the situation, but the events highlighted yet again that transition from military rule remains the most pressing issue for Egypt's economy. Over the last week, investors and analysts have repeated the line time and again, as debate ensues over the country's dwindling foreign exchange reserves and troubled public finances.
On Sunday the EGX30 rose 2 per cent, before the protests and violence kicked off, amid speculation that a new round of international loans were in the offing. The events of Sunday night, and the bleak picture facing investors on Monday, suggests that even these loans, as a headline event, will not be able to overshadow the underlying political risk Egypt faces for as long as it remains under unstable military rule.
A firsthand account: Marching from Shubra to deaths at Maspiro - Al Masry Al Youm
Coverage of Egypt - FT Tilt