The final round of Egypt's first free presidential elections went into its second day on Sunday, with voters having to choose between two polarizing candidates, keeping foreign investors apprehensive about the possible outcomes and policy implications.
Mohamed Mursi, the official candidate of the Muslim Brotherhood's political wing, the Freedom and Justice Party, is facing off Ahmed Shafik, a former Commander in the Egyptian Air Force and Hosni Mubarak 's last Prime Minister for the top job.
Shafik tailed Mursi by less than 300,000 votes in the first round last May, and the second round is expected to be a similarly close sprint. The winner will be announced on June 21.
Polling stations in the Arab World 's most populous will remain open until 8 pm local time today. So far, no major breaches have been reported and long queues were rare. Turnout will be watched carefully, as the first round surprised with only 46 percent of 52 million eligible to vote.
"It should be expected that the turnout will be low, given that it seems a sizable portion of the Egyptian population want neither candidate and do not plan to vote," Angus Blair, Founder of the Signet Institute, a Cairo-based think tank, told CNBC.
The election is taking place on an increasingly deleterious political arena, with last week's court ruling suspending parliament and a constitution that has yet to be written. Some members of parliament have accused the ruling military council of staging a "soft coup".
"It came as a surprise to many, domestically and globally, and has left many Egyptians at a loss as to what the last 18 months have been about and whether they will have the accountable government they wanted when they overthrew the last government," Blair explained.
Fitch Ratings was quick to downgrade Egypt's sovereign credit rating and assigned a negative outlook following the court decision to dissolve parliament, pointing out that the ensuing "political uncertainty could weaken confidence and heighten near-term economic and financial pressures".
The political limbo is also disrupting the conclusion of urgently needed external financing, in particular a $3.2 billion from the International Monetary Fund , and is a drag on foreign currency reserves. Despite marginal increases of late, many analysts remain skeptical and insist that an eventual devaluation is unavoidable.
"The situation remains that there will likely be some devaluation. It's the size and timing thereof where most opinions differ," Ahmed Ozalp, Managing Director of Akanar Partners, told CNBC.
In another sign of deteriorating liquidity conditions, the Central Bank of Egypt announced after its committee meeting that it would introduce 28-day repos on July 10. The magnitude of recent events also reflected in the cost of insuring Egyptian debt for five years, which rose by 28 basis points to 650 on Friday, according to data from Markit. It is the highest level since March 2009.
Although Ozalp agreed that political progress was crucial to move forward, he argued the country's fundamentals were solid.
"In the meantime, investors would be best positioned to focus on select low beta opportunities and especially consumer-driven plays that will continue to perform regardless of political outcome," he added.
Egypt is one of the few countries in the region to enjoy Emerging Market status by the MSCI, although it comprises less than 0.5 percent of the benchmark EM index. The local stock exchange, the EGX30, is still one of the world's best performers, albeit it lost 1.6 percent last week. The market will reopen on Monday after the presidential election.
The Market Vectors Egypt exchange-traded fund in the U.S., another approach for foreign investors to gain exposure to Egypt, saw a more spirited reaction, closing 3.6 percent lower on Friday.
Yousef Gamal El-Din is CNBC's Middle East Correspondent and contributes to the channel’s flagship shows, as well as analysis for CNBC.com.
Stay in touch with him on Twitter at http://www.twitter.com/youseftv @youseftv