The Tel Aviv Stock Exchange opened the trading week with sharp losses as Egypt entered its sixth day of protests yesterday.

The concerns over the future of President Hosni Mubarak's regime - and the ramifications for the Middle East - had depressed markets around the world on Friday, when they registered their sharpest losses since November.

The blue-chip Tel Aviv-25 lost a hefty 3.75% to close at 1,283. The broader benchmark Tel Aviv-100 fell 3.8% to close at 1,192.

Turnover was a massive NIS 3.8 billion, more than twice the daily average, as foreign traders fled the region.

"We received a lot of calls over the weekend and this morning about the effects of the events in Egypt on Israel," said one market source. "I didn't hear fear; these are institutional investors, after all."

The trader speculated that about NIS 1.1 billion of the turnover stemmed from foreign investors - particularly high given that they're usually off work on Sundays.

"This could be a significant change," he said. "Everyone believed there was zero risk in Egypt, and now that's changed."

Israelis also pulled about NIS 500 million out of mutual funds - about 0.3% of the total, said a sector source. That's not much, the source added.

It could be that yesterday's changes were a little overblown. On the other hand, it looks like today will be a bad day too, he said.

Israeli money managers said their foreign investors were turning to them for political analyses, not just investment advice.

"For some of the foreigners we've become pundits, even if we're just citing what we heard in the Israeli media," said one.

One foreign investor expressed fear, stressing that Israel's risk premium had jumped. The price of credit default swaps for Israeli government bonds jumped 27%, from 115 basis points to 146 basis points, due to the increased geopolitical risk. CDS reflect the perceived risk that a bond will default.

The country to the north now has an Islamic government (Hezbollah has chosen Lebanon's new prime minister ), and the Muslim Brotherhood could be taking over the country to the south, the foreign investor reportedly told a local money manager.

Others disagreed, saying it was business as usual and that foreign investors were still sitting on the fence.

Hadar Oshrat, head of trade at Deutsche Bank Israel, said most foreign investors weren't budging and that yesterday's sell-off had been by small-time investors motivated by fear, not logic.