Advisers: Clients not spooked by Egypt — yet

While Americans in Egypt evacuate with help from the U.S. Embassy, financial advisers are considering whether investments in the embattled nation — and the rest of the Middle East — should follow.
FEB 01, 2011
While Americans in Egypt evacuate with help from the U.S. Embassy, financial advisers are considering whether to keep investments in the embattled nation — and the rest of the Middle East — or get out. Some investors have already begun exiting. Stocks on Middle Eastern markets fell yesterday after a week of of violence and protests urging Egyptian President Hosni Mubarak to resign. “Just as people flee, it's a good bet that a lot of people with structured investment in Egypt are also reconsidering or taking out their assets,” said Diana Furchtgott-Roth, senior fellow at the Hudson Institute. Fears the instability will spread could hurt investments in the entire Middle East, said Ms. Furchtgott-Roth, who formerly was chief economist at the Labor Department. “It doesn't look like anything will spread to Saudi Arabia but the possibility of it spreading to Jordan is somewhat greater,” she said, adding that other fragile countries include Yemen and Algeria, she said. Famed investor Barton Biggs, who runs hedge fund Traxis Partners LP, told Bloomberg Television he's not selling securities because of the protests in Egypt that drove down stocks worldwide on Jan. 28. Likewise, advisory firms said their clients haven't been calling them worried about the situation in Egypt. Most advisers have examined their clients' exposure and decided there's no need to act at this point. Bob Andres, chief investment officer at Merion Wealth Partners, said clients should be paying more attention to the impact the region's instability could have on oil prices. A disruption in oil flowing through the Suez Canal could impact at least 40% of the oil supply, he said. Theo Gallier, chief investment officer with Private Ocean, an advisory firm that manages about $700 million in assets, said the firm's clients aren't invested in Egypt. But he said the firm is paying attention to the impact in the region. He agrees the biggest worry would be a jump in the price of oil because it is such a large component of inflation, he said. The firm hedges that risk with managed futures that contain crude oil contracts, Mr. Gallier said. Financial adviser Sam Jones, president of All Season Financial Advisors Inc., believes there is limited economic significance to worry about. “To me it's almost like a natural disaster, in terms of the economic impact,” he said. “It's doesn't have as much to do with economics as it has to do with politics.” Mr. Jones, whose firm manages $110 million in client assets, said his clients have not reached out to him for direction or feedback related to the political unrest in Egypt. “Our folks know that if it's heading south, we're out,” he said.

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