ETF Trends
ETF Trends

One day after luring investors in droves, sending trading volume through the roof, the Market Vectors Egypt (NYSEArca: EGPT) exchange traded fund (ETF) is sagging under the weight of increasingly violent protests.

EGPT is down more than 5% today as protests in Cairo turned violent. President Hosni Mubarak’s supporters are clashing with anti-government protesters, resulting in injuries.

The violent turn combined with Mubarak’s pledge to stay in office through the next election in order to ensure an orderly transition has apparently unnerved investors who piled into the fund in previous days.

EGPT has whipsawed in recent sessions, Reuters points out. In the last 12 sessions, gains and losses in the fund have often neared 8% and trading volume when through the roof. All told, it’s down 13% since Jan. 14.

Egypt isn’t the only country to watch as the situation there unfolds; contagion could spread to other Middle Eastern countries and ETFs that have large allocations to those markets, while other funds could reap the benefits of the turmoil:

  • United States Oil (NYSEArca: USO): In the last five days, USO has moved up 5% as oil prices sit around $100 a barrel. If fighting continues, it could have a continued impact on oil prices and it may not be pretty.
  • Guggenheim Airlines (NYSEArca: FAA): The flip side to rising oil prices is that it could cause FAA’s performance to suffer. Airlines have based their 2011 forecasts based on oil being at $84 a barrel. If the prices stay at this level, next earnings season may not be pretty for airlines.
  • iShares MSCI Israel (NYSEArca: EIS): Much hay has been made of the protection that Egypt gives Israel, and watchers have been fearful that the leadership changes in the country could spell the end of that. That could have big ramifications for Israel and this ETF.
  • PowerShares DB Agriculture (NYSEArca: DBA): It’s been said that the impetus for the clashes initially were sky-high food prices, and they’ve long been a source of conflict in Egypt.
  • iShares Dow Jones U.S. Oil & Gas Exploration & Production (NYSEArca: IEO): Apache (NYSE: APA) is nearly 9% of this fund. Why is that so important? Apache happens to be the largest U.S. investor in Egypt, giving the country more than $7 billion over the last 17 years, says Jason Kelly for Seeking Alpha.

For full disclosure, Tom Lydon’s clients own shares of IEO.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.