Market Vectors Egypt ETF (NYSEArca: EGPT) was up about 1% in U.S. trading Wednesday afternoon following reports that Egypt announced a ceasefire agreement between Israel and the Islamist Hamas movement.
After rallying about 50% this year, the Egypt-focused exchange traded fund has come against headwinds. Egypt’s economy is at risk now that Israel’s latest offensive against Hamas could have backlash, and President Mohammed Morsi is regulating various corporations.
“EGPT bottomed at just over $10 in late June and was found flirting with $16 by mid-September, but the lone ETF exclusively devoted to the North African country could be in for some downside. Government disputes with Egyptian companies look to be the culprit. Egyptian equities are trading at two-month lows as investors are becoming skittish the government is not doing enough to solve the disputes,” Bloomberg reported.
The Egypt ETF was up 51.3% year-to-date, proving this emerging market was resilient due to lower correlations with developed markets. EGPT even rallied September 11, when protesters stormed the U.S. embassy in Cairo, reports Benzinga on Nasdaq. Tensions are rising in Egypt as Israel’s newest offensive against the Hamas in the Gaza strip will be the biggest headwind for this economy. EGPT has slipped about 5.2% in November. [Index ETFs for Emerging Markets in Trouble?]
Egyptian equities recently had their worst performance as Commercial International Bank Egypt slid to its lowest level in two weeks. This is Egypt’s largest lender, and accounts for about 9.5% in EGPT. The ETF also gives about half of the holdings to the financial sector, reports Benzinga on MarketWatch.