Credit Suisse downgraded its rating on emerging markets equities to "neutral" from "overweight" on increasing geopolitical risks in the Middle East and North Africa (Mena) region and increased uncertainty over oil prices but remained positive on the UAE and Qatar.
The brokerage, which cut its rating on Egypt equity to "underweight" from "neutral," said the threat to the region from the Egypt crisis was particularly a threat to the global oil supply.
Egypt is not a major oil producer but protests and demands for political change there come just two weeks after Tunisia's president was overthrown. There are concerns that oil-producing states in the region -- that produces over a third of the world's oil -- may face similar protests.
"This could cause an oil spike which could then threaten the global recovery," the brokerage said in a note to clients.
Egyptian markets were closed on Monday after a week of sharp falls but ripples from the protests are being felt globally, pushing up oil prices, hitting equity markets and pushing investors into safe-haven assets such as the dollar.
Given the bearish sentiment on Egypt, the brokerage, which is "highly positive" in the long-term investment story in the Gulf region, downgraded the region to "neutral," but remained positive on Qatar and the UAE.
"In fixed income, Egypt does not alter our constructive view on core emerging markets," the brokerage said.
However, uncertainties could weigh on credit fundamentals in the region in the near term, it said.
The US stock market and the dollar may be closely linked in the coming days. The dollar may generally stay supported. Creditor currencies Swiss franc and Japanese yen may also be more in favor at this time, Credit Suisse said.