Something else to consider when it comes to the EGPT/GREK comparison: Market closures, which equate to lack of market accessibility, draw the ire of index providers. As Bloomberg notes, index provider MSCI was far from pleased about stocks in Cairo being closed four years ago.
Last year, Russell Indexes, now part of FTSE Russell, demoted Egypt to frontier markets status from emerging markets classification. Last month, MSCI said it is considering a similar demotion for Egypt.
Greece is at risk of an even more dubious demotion. In November 2013, MSCI demoted Greece to emerging markets status from the developed market classification. Now, the index provider is mulling a demotion that would send Greece to the ominous “standalone” market classification. Assuming MSCI moves forward with such a demotion, that means Greek stocks would be expelled from the MSCI Emerging Markets Index and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), skip over the iShares MSCI Frontier 100 ETF (NYSEArca: FM) and head straight to standalone status. [Greece Could Face big Index Demotion]
The last country MSCI demoted to standalone status was Venezuela in May 2006. If Greece earns that dubious market classification, it would join the likes of Botswana, Ghana, Jamaica and Zimbabwe in standalone territory, according to MSCI.
Tom Lydon’s clients own shares of EEM.