Dubai: Egyptian share prices plunged the most in over a year on Sunday as renewed protests, sparked by President Mohammad Mursi’s decision to grant himself sweeping new powers, unnerved investors already jittery about the prospects for the country’s economy.

Divisions in Egypt have deepened over the past few days as thousands of people have mounted competing demonstrations backing and opposing President Mursi’s controversial decrees, issued late Thursday, which consolidate his power and sideline the judiciary.

The benchmark EGX-30 Index closed down 9.6 per cent at 4917.73 on Sunday, wiping out the modest gains of last week that followed the signing of a preliminary agreement on a $4.8 billion loan from the International Monetary Fund. It was the biggest daily decline in Egyptian shares since the immediate aftermath of the revolution that toppled former President Hosni Mubarak in February 2011.

“There is short-term sentiment to worry about, but also a medium term impact to fundamentals,” said Mike Millar, head of research at Cairo-based Naeem Brokerage.

Markets are concerned that the renewed protests could delay the arrival of much-needed financing from the IMF and other donors, and could prolong the political uncertainty which has paralysed decision-making on economic issues since the revolution.

“In the very short term, investors should seek protection in defensives, or stock with little Egypt exposure. There are also a handful of stocks traded on the EGX that derive little or none of their revenue from inside Egypt,” Millar said.

Egypt’s economy has been hurt badly by a sharp drop in tourism and foreign investment since the revolution. Prior to this, the country was long viewed as an emerging-market star, with rapid expansion fuelled by decades of stability and the Mideast’s largest population.

As part of its IMF loan agreement, Egypt plans to reform its energy-subsidy regime and overhaul the tax system, moves that could cause some public anguish in the months ahead. 
In Amman, thousands of protesters took to the streets earlier this month to express anger at the Jordanian monarchy over rising fuel prices, following cuts in Jordan’s expensive energy subsidy regime.

Analysts are concerned that with trouble on Egyptian streets flaring up again, this could prove a set back for foreign direct investment and slow tourist arrivals.

“The escalation of events is negative in the short term as it raises political uncertainty and the probability of further unrest, though it could shorten the transition period,” analysts at HC Brokerage said on Sunday.

Sunday was the first trading day since the issue of President Mursi’s decrees late on Thursday, with Egyptian financial markets shut on Friday and Saturday for the weekend.