Coming into the year, analysts pegged Tunisia as a potential breakout performer among regional markets. The political turmoil of the past week makes that much more unlikely.
The north African country's benchmark Tunindex declined 13 per cent last week as rioters protested against unemployment, food prices and corruption.
Officials of the country's stock exchange met representatives of brokerages yesterday to decide whether to open for trading as violence persisted after Zine el Abidine ben Ali was ousted from the presidency.
Brokers also fear Tunisia's most important initial public offering (IPO) of the year may be delayed.
Tunisia Telecom may be forced to postpone its share sale if conditions worsen, said Fathi ben Grira, the chief executive of Menacorp in Abu Dhabi. Investors were expecting the IPO to improve the market's capitalisation, Mr ben Grira said. It currently stands at US$9.5 billion.
Tunisia Telecom has said it plans to list its shares on the country's stock exchange in the first half of this year. Qatar Telecom bought a 50 per cent stake in the company for $1.2bn in November.
"Algeria, Tunisia and Libya are the next big markets," Mr ben Grira said. "What happened was a huge surprise. It will take time for the economy to rebound.
"Fundamentally, the country has had strong growth, averaging 5 per cent in the past 15 years. The problem was the unemployment of graduates."
Despite low levels of trading liquidity, Tunisia's bourse has drawn increasing numbers of foreign investors to its listed stocks, which represent an array of sectors, including banking, property and utilities. The last IPO in the country was by Carthage Cement in June, which raised a record 139.4 million dinars and featured heavy participation by GCC investors.
Tunisia was prepared yesterday to unveil a government of national unity as interim leaders struggled to impose order. The government is set to include ministers from the old regime, members of the opposition and independent figures, an opposition leader said. Presidential and parliamentary elections are to be held within two months.