Up 29% year-to-date, the Market Vectors Egypt Index ETF (NYSEArca: EGPT) is one of this year’s top-performing single-country emerging markets ETFs.
EGPT ‘s bullishness could remain in tact after Egypt, North Africa’s largest economy, dodged a demotion to frontier markets status in MSCI’s (NYSE: MSCI) annual marker reclassification.
EGPT and Egyptian equities have soared this year after a military coup ousted a government with deep ties to the Muslim Brotherhood 11 months ago.
Last year, the index provider put Egypt on watch for a possible demotion to frontier status in the wake of increased political volatility and depleted foreign currency reserves. Although EGPT recently tumbled After former Egyptian army chief Abdel Fattah al-Sisi’s win in the presidential election, MSCI removed Egypt from consideration for a market classification demotion. [Egypt ETF Falls After Election Results]
“Following the substantial increase in Egyptian foreign currency reserves, MSCI also announced that it is no longer considering launching a public consultation on a potential exclusion of the MSCI Egypt Index from the MSCI Emerging Markets Index,” said MSCI in a statement.
Earlier this year, another index provider, Russell Investments, demoted Egypt to frontier status. The index provider will move Egypt to frontier status effective June 27, 2014.
There are signs Egyptian financial markets are evolving for the better. Those signs include the debut of the country’s first domestically-listed ETF, courtesy of Beltone Financial. The country also recently saw its first initial public offering price in three years. [Egypt ETFs Rallies as Investors Return]
“Arabian Cement Company’s IPO was 18.5 times oversubscribed on the retail side and covered 11 times on the institutional side, including by US and UK investors, according to CI Capital, co-bookrunners on the float along with EFG Hermes,” reports Financial News.
EGPT is pricey compared to the broader emerging markets universe at a P/E of almost 16 and the fund is, not surprisingly, volatile. The ETF has a beta of 1.44 against the S&P 500 of 1.44 and a three-year standard deviation of 33.5%, according to Market Vectors data.
Market Vectors Egypt Index ETF
ETF Trends editorial team contributed to this post.