The Egypt related exchange traded fund is faltering and showing a greater disconnect with the underlying stocks as political violence escalates and forces the Egyptian bourse to close.
The Market Vectors Egypt ETF (NYSEArca: EGPT) was down 3.2% Thursday and has declined about 5.7% since the street violence began Wednesday.
Bloody violence erupted in Egypt after a crackdown Wednesday on Muslim Brotherhood protestors who supported and called for the reinstatement of ousted President Mohammed Morsi, reports Ahmed A. Namatalla for Bloomberg.
“The market’s reaction to events like this is going to be hard and it’s going to be quick, at least until pressure on the street eases,” Souheir Asba, a frontier-markets strategist at Societe Generale SA (GLE), said in the Bloomberg article.
However, the Egyptian market closed Thursday due to the increased violence sweeping the country, Reuters reports. An official optimistically believes that the bourse will resume trading next week.
“Closing of the banks and the bourse is disconcerting for investors because it may indicate that security forces are planning something even bigger and more violent,” Asba said in the Bloomberg article.
“Once the market is going to open, it’s going to crash,” Asba added in a Wall Street Journal article.