ETF Trends
ETF Trends

As the Egyptian saga comes to a denouement, the focus is shifting to other Middle East nations. An increase in demonstrations and violent protests in the Middle East threatens to destabilize the region’s economies, and Middle East exchange traded funds (ETFs) are spilling on the reports.

The recent wave of unrest in the Middle East stem from economic problems, such as high unemployment, growing population of youths, a wide discrepancy between the rich and poor and autocratic regimes that enrich a small few at the expense of the majority, according to MarketPlace.

CNN provides a clearer picture on what is happening in the various countries in the Middle East and North Africa. Though  many of these countries aren’t any part of Middle East ETFs, the contagion effect is definitely being felt as a result of what’s going on:

  • Algeria. Anti-government protesters pushed authorities to lift a 20-year state of emergency in the “coming days.” Around 100 protesters were arrested on Saturday.
  • Iran. On Monday, tens of thousands marched along Revolution Avenue in Tehran, protesting against the government of President Mahmoud Ahmadinejad.
  • Iraq. Thousands gathered to protest the high poverty, a 45% unemployment rate and shortage of food, electricity and water.
  • Jordan. Following anti-government protests, the newly established government will be making political reforms.
  • Libya. Social networking sites have called for a day of peaceful demonstrations in Libya where leader Moammar Gadhafi has ruled for almost 40 years.
  • Yemen. For the third day in a row, pro- and anti-government demonstrators clashed in Yemen’s capital, Sanaa.

The protests have impacted some of the Middle East ETFs more than others, though it’s generally been negative. If you’re looking to invest in this region, these three ETFs can get you your exposure. You’ll just have to determine how much of a weighting in particular countries – or their presence at all, in the case of some – matters to you:

  • WisdomTree Middle East (NYSEArca: GULF): GULF is down 1.1% so far today, though in the last five trading days it’s managed to turn slightly positive with a 2.2% gain. Kuwait is 30%, Qatar is 23.9% and United Arab Emirates is 20.2%. Egypt also gets a decent representation with 12%. Jordan is a small 1.3%.
  • Market Vectors Gulf  States (NYSEArca: MES): In the last month, MES hasn’t been hit as hard as PMNA, but today it’s down more than 1%. Kuwait makes up a whopping 42%, while Qatar and United Arab Emirates get around 20%. Yemen is a tiny 1.4%.
  • PowerShares MENA Frontier Countries (NYSEArca: PMNA): PMNA is down 8% in the last month. Of the currently most troubled countries, Jordan is the only one in this fund with a 10.4% weighting. The more stable nations of Kuwait, Morocco and United Arab Emirates each get around 20% of the ETF.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.