Dubai If the Egyptian government clings to power, political risk is likely to increase as demands for change continue and investors will face an uncertain market, an Egypt-based analyst said.

"If the change is complete, it will open the gates of the future for Egypt and people will regain the money stolen by corruption. It will be a great start for Egypt," Ahmad Al Naggar, economic analyst at Al Ahram Centre for Political and Strategic Studies, told Gulf News.

Wheel of corruption

A more transparent environment will emerge and rid people of the corruption allowed under the old regime, he said. "If the people win they will stop the wheel of corruption that has crushed Egypt."

Egypt's credit rating outlook was revised to negative from stable by Fitch Ratings due to the political unrest and uncertainty. "Politics has always been a driver of the Egyptian rating. It is one reason the country was rated at a BB plus level.

"If there was less political risk, then it would be in the investment grade arena," said Stephen De Stadler, regional business leader for the Middle East at Fitch Ratings.

Any "continuation, escalation or intensification" of the ongoing riots in Egypt could affect its economic and financial performance and lead to a ratings downgrade, he said.

The extent to which the government reacts positively to the political crisis will affect the credit rating, he said. Investor confidence has been "very low" due to the six-day turmoil, said Al Naggar.

The Egyptian stock market and banks across Egypt were shut yesterday and will remain closed today. The stock market benchmark index dropped 16 per cent in two days after the unrest and the pound tumbled to six-year lows.

Security fears

Security fears about the major institutions and trading on the pound in this crisis could lead to an "unjustified collapse" in the pound as speculators sell off stocks and more people exchange the pound for the dollar, said Al Naggar.

"These are the most sensitive institutions to any crisis, so that's why you see this collapse," he said.

There will only be losses in market capitalisation on the stock exchange because if companies work and trade they will recover their losses, he noted.

"As long as bonds don't collapse, stocks will regain value quickly," Al Naggar predicted.

The central bank's reserves were strong at $36 billion (Dh132.21 billion) and any capital flight by foreign investors would be short-lived, said Hisham Ramez, the deputy central bank governor, according to Al Jazeera.

"The banks are sufficiently capitalised to withstand the level of expected risk. The real issue is: To what extent will this become an unexpected risk," said De Stadler.

Egypt, which is heavily dependent on tourism, is facing a "state of halt" in tourism now as embassies are advising compatriots not to go to Egypt during this uncertain time, said Al Naggar.