(Reuters) - Egypt's armed forces overthrew elected Islamist President Mohamed Mursi on Wednesday and announced a political transition with the support of a wide range of political, religious and youth leaders.
After a day of drama in which tanks and troops deployed near the presidential palace as a military deadline for Mursi to yield to mass protests passed, the top army commander announced on television that the president had "failed to meet the demands of the Egyptian people".
Below comments by U.S. analysts and economists on the risk to emergenging economies.
FRANK HUSIC, MANAGING PARTNER AND CHIEF INVESTMENT OFFICER, HUSIC CAPITAL MANAGEMENT, SAN FRANCISCO:
"Clearly it has had a bullish effect on the price of oil, which got to $100 again and has been there for a while because of concern about slowing global growth, especially in China."
"It may exacerbate the outflow from emerging countries, which has been one of the most important trends of the past month."
TOM KLOZA, CHIEF OIL ANALYST, GASBUDDY.COM, NEW JERSEY:
"The comparison is going to be with the Arab Spring in 2011, the fall of Libya and the loss of Libyan crude in the first quarter of 2011."
"We've seen kind of a predictable kneejerk reaction this week where all crude oil prices have moved higher, and the WTI futures market settled above $100 a barrel today, and it was the first time we've settled above that number since May 4, 2012."
"Even if this uprising were to impact some of the Northern African sweet crude exports, it's probably something that the West can make the adjustment, because we're seeing so much robust exploration and production."
BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, INVESTMENTS GROUP, WELLS FARGO FUNDS MANAGEMENT, MEMOMONEE FALLS, WISCONSIN:
"I've been following it very closely. My big concern was whether Mursi would try to dig-in and turn things violent. I'm not worried about the Suez Canal closing as the military has bolstered their defences and are the ones responsible for keeping it open.
"I think we'll see oil prices come down and there is little risk of trade being cut-off through the canal. A more secular government in Egypt would likely lead to more political stability in Egypt. We'll have to see what happens with the next set of elections, but I think this could play out pretty well.
ERIC FINE, PORTFOLIO MANAGER FOR THE VAN ECK UNCONSTRAINED EMERGING MARKET BOND FUND:
"Egypt's strongest card in this turbulence as far as the bond market is concerned, is the eagerness of the IMF and its main shareholders, the U.S. and Europe, to not create any additional instability in terms of the economy. If good faith efforts are made liquidity will be made available as long as political stability can be achieved, even if that is on an interim basis.
"In general they have several weak cards, including a strained fiscal policy, more than normal opacity in the banking system, high government debt levels, and an economy that is still finding its footing."
PAUL SULLIVAN, PROFESSOR OF ECONOMICS, NATIONAL DEFENSE UNIVERSITY:
"I've heard there's a premium of $5 in oil because of what's going on but this has been building for a while.
"If Egypt heads south and goes into chaos, it puts the Suez Canal and other countries in the region at risk.
"We've had two revolutions now in Egypt, and Algeria's economy is pretty bad, so all of the data are there to spark a revolution. What happens in Egypt may determine what's going to happen in many other countries for some time to come".
BILL STRAZZULLO, PARTNER AND CHIEF MARKET STRATEGIST, BELL CURVE TRADING, BOSTON:
"I think a simple way for people to interpret this is crude oil prices are above $100, and the longer you sit up there that's going to be an issue. People are going to watch to see, 'ok is this just kind of an isolated news event and the market drops in a day or two, or is it going to continue to hold above $100?'"
"You've got an economy that's already not on the strongest footing. You stay above $100 you're going to see that reflected in gasoline prices. It won't take too long for that to happen."
JIM RUSSELL, SENIOR EQUITY STRATEGIST FOR U.S. BANK WEALTH MANAGEMENT, CINCINNATI:
"No question that this kind of raises the spectre that emerging markets on occasion are volatile, politically, militarily, and this is a fine example.
"We do think that the events in Egypt that have happened and the events that are likely to unfold in the weeks ahead are likely to put upward pressure on oil prices. This does represent to the investment community political and military unrest and uncertainty about the future."
DAN FUSS, VICE CHAIRMAN AND PORTFOLIO MANAGER AT LOOMIS SAYLES, BOSTON:
"This was not a surprise. It is the best telegraphed coup you ever saw. Everyone had set their watches. We have exposure to emerging markets but not as big as it used to be and it seems, in general, a little too early to be buying this market. Certainly, prices are far more attractive than they were and market trends have been strongly against emerging markets.
"But what is moving emerging markets these days are the cash flows on the retail side. I would say the last two days have been flat to better but volume is so light. In the short term, all this means is that Egypt would be a bit more peaceful."
J.J. KINAHAN, TD AMERITRADE CHIEF STRATEGIST:
"One of the reasons we have seen so many put options in many of the emerging market products, mainly exchange-traded funds, is that with tomorrow's day off for the U.S. July 4 holiday and the Egyptian situation being so fluid, traders want to protect themselves for over a day and a half lost this week.
"The first market that most people look at for immediate effect will be the oil market. We have seen a very quick move in West Texas crude over the past 48 hours and there has been heavy trading in that commodity in both options and futures."
ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ, NEW YORK:
"Investing overseas involves risks including geopolitical risks.
"The situation in Egypt is by no means the only risk facing emerging markets right now. You've got the slowdown in China, you've got the slowdown in Brazil."
Oil prices ended higher for a third consecutive day on Wednesday, with the New York contract settling at a 14-month high, as traders fretted about unrest in Egypt and reacted to rapidly tightening supplies in the U.S. domestic market.
Credit default swaps data from Markit shows Egypt's sovereign 5-year spreads have widened to 950 basis points on Wednesday from 878 basis points on Tuesday.
(Americas Economics and Markets Desk; +1-646 223-6300)
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