Daily volume on Egypt's stock exchange has plummeted from 1 billion… (Mahmoud Khaled/ AFP/Getty…)
CAIRO — His phone doesn't ring and his charts are gloomy.
But every day Mostafa Ismail, a financial broker with a hangman's demeanor, steps into the Egyptian stock exchange hoping for positive blips. They are rare in a nation where revolution has brought two years of political instability and turned "investor confidence" into a quaint phrase from a more prosperous era.
"The market has declined as far as it can go," said Ismail, his tie loosened, a string of numbers before him. "There's no one to trade or buy or sell with."
Even for those who crave risk, the Egyptian stock market is a cautionary tale of sobering loss. Daily volume has plummeted from 1 billion Egyptian pounds — about $143 million — after the 2011 uprising to about 250 million pounds today. The main index, which before the world financial collapse in 2008 was at 12,000, dropped to a low of 3,500 before crawling back to 5,000 in April.
"Egypt is now collapsing on the political and economic levels and we are paying a dear price," Mohamed ElBaradei, an opposition leader, said recently. "The state is falling apart."
The overthrow of Hosni Mubarak led to the political ascendancy of President Mohamed Morsi and his Muslim Brotherhood, which controls the government. Secular investors and businesspeople worry about the Islamists' grip on power at a time when the economy is in peril and Egypt is facing a summer of slack foreign investment, a high youth unemployment rate, and gas and power shortages.
The disarray among the moneyed old guard signals a redistribution of market control and maneuvers by the once-outlawed Brotherhood to sideline or co-opt those who amassed fortunes under Mubarak's corrupt rule in favor of its own supporters. Antigovernment tycoons, meanwhile, want the country's rulers to fail, which would derail the introduction of Islamic financial principles, which investors warn could damage Egypt's international image.
"There are no new investors in Egypt and the large ones are starting to leave the market," said Ahmed Hamdy, deputy branch manager of Sigma Securities in Cairo. "The 1% that controls Egypt's wealth are holding their money. They don't want to invest, because it could start the economy moving and benefit the Brotherhood. This is the battle."
The struggle was evident in March when the government ordered a travel ban on two of Egypt's richest men, Nassef Sawiris and his father, Onsi. The Coptic Christian family's Orascom Construction Industries was charged with tax evasion. The company agreed late last month to pay a $1-billion settlement, but the dispute, which had triggered a market plunge, made investors worry that the government was targeting certain firms.
Nassef Sawiris' brother Naguib, a telecommunications billionaire and political enemy of Islamists, returned to Egypt on May 3 after months of living abroad. He was greeted at the airport by officials from Morsi's office, an apparent attempt by the government to send a positive signal to investors.
"The market used to be controlled by Mubarak's sons, Alaa and Gamal, and by the Sawirises and their allies," said Ismail, a broker at Sigma Capital. "Brotherhood businessmen, such as Khairat Shater, were always in the shadows. But now they're in control, and they haven't shown us their cards."
Shater is the Brotherhood's chief political strategist and financier. A multimillionaire engineer who was imprisoned by Mubarak, he is an Islamist hard-liner but has said he supports open markets and free trade. His pragmatism is tempered by distrust of those who profited while he and the Brotherhood were persecuted.
Some analysts suggest the deeper aim of the Brotherhood and Morsi is to reshape a stock market that they view as violating Islam. Strong factions within the Brotherhood consider investing in stocks as gambling and usury, which are forbidden by the Koran.
"The Brotherhood doesn't hold the stock market in high regard," said Rashad Abdou, an economics professor at Cairo University. "They want to turn it into an Islamic stock market, which has different criteria, including the issuing of [no-interest] Islamic bonds."
He classifies Shater and other Brotherhood businessmen as merchants rather than corporate executives who understand wider market forces, and fears they could further undercut the economy. "Neither the president nor those around him are well-informed about economics or business," he said.
The market intrigue is playing out against a sagging economy and foreign investments that have plunged more than 60% since Mubarak was deposed. Morsi has slowed privatization and has yet to enact austerity measures, including subsidy cuts on commodities, over fear of inciting protests from the poor. Such measures, however, are likely to determine whether Egypt receives a $4.8-billion loan from the International Monetary Fund.
"We need the IMF loan for one thing: a demonstration of credibility that the economy is OK. This will give confidence to bring back investors," especially from Europe and the Persian Gulf countries, said Hamdy, the deputy branch manager. "We need new blood in the market. Eighty percent of brokerage houses in Egypt are losing money and so far no one has a solution."
Much of the market's unease is connected to the lack of political consensus between the Brotherhood and opposition parties. That schism has led to protests, labor strikes and the inability of the government to unify Egyptians increasingly angry over unemployment, crime and inflation.
"There are protests every day and people throwing Molotov cocktails," said Abdou. "This political chaos is reflected in the stock market."
Special correspondent Ingy Hassieb contributed to this report.