Reuters/Dubai

Egypt’s bourse retreated yesterday amid a wider regional decline as worries over an army crackdown against the Muslim Brotherhood worsened an already weak sentiment on geopolitical risks from a potential military strike against Syria.

Regional markets recovered some lost ground on Sunday after US President Barack Obama delayed an imminent military strike against Syria, saying he will seek congressional consent. Short-term profit-taking however, dragged prices back down. A strike, if approved, is not expected before mid-September.

“Although short-term pressure has faded for another week or so until there is a resolution from Congress, Egypt is correlated to regional volatility and price swings,” said Islam Batrawy, deputy director of sales trading at Egypt’s Naeem Brokerage.

In Egypt, army-backed authorities referred deposed president Mohamed Mursi to trial on Sunday on charges of inciting murder and violence. Later on yesterday, a judicial panel advised a court to dissolve the Muslim Brotherhood as a legally registered non-governmental organisation.

This is likely to widen the gap between factions in the polarised nation and reduces chances of an inclusive government when Egypt heads for parliamentary elections, as planned by the interim authorities. “Locally, the Mursi trial news is adding to the cautious sentiment,” Batrawy added.

After being battered this year by the local political crisis, Egypt may stay under pressure from worries of a possible attack in Syria. While this seems unlikely to have a direct impact on neighbouring states, but a wider conflict could stir problems in the region and impact fuel supplies.

Cairo’s index fell 1.1% to 5,245 points. The market is down 3.8% year-to-date, significantly underperforming its Gulf peers that are enjoying a bull-rally.

Elsewhere, Dubai bourse slipped 0.5% in volatile trading and snapping two sessions of gains.

Shares in Drake and Scull International slipped 0.9% in a downbeat market. The firm said it won a 415mn dirham ($112.99mn) contract from the main developers assigned to build a branch of France’s Louvre museum in Abu Dhabi.

Saudi Arabia’s index climbed 0.7%, up for a fourth straight session since it fell to a one-month low.

Banking shares led gains with the sector’s index rising 1.2%. Heavyweight petrochemical sector added 0.7%.

“The priority for the rebound is retail and then petrochemical and then banking - definite positive we see in the growth story,” said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC.

The retail sector added 0.6%. Companies in the industry are enjoying robust double-digit growth buoyed by an increasing population and spending power.

Petrochemical producing firms are also seen benefiting - from higher oil prices. “If the Syrian conflict intensifies, Saudi Arabia’s market is insulated from foreign investment fluctuations and will benefit due to its proximity to oil,” Naeem’s Batrawy said. Foreigners can only trade Saudi equities via swaps.

Markets in the UAE however could face an inverse reaction and a flight of foreign funds, he added.

Elsewhere in the Gulf, Abu Dhabi’s index ticked up 0.04% to 3,804 points; Kuwait’s measure slipped 0.4% to 7,596 points, Oman’s benchmark eased 0.07% to 6,731 points, while Bahrain’s gauge edged up 0.05% to 1,189 points.