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Waiting for a Dip With the Egypt ETF


The Market Vectors Egypt Index ETF (EGPT) entered Monday with a year-to-date gain of 37.5% making the lone the Egypt ETF the second-best performer among single-country emerging markets ETFs this year.

Only the Market Vectors India Small-Cap Index ETF (SCIF) has topped EGPT, but investors may want to wait on a pullback in the Egypt ETF before considering new positions. That despite a rally that has carried EGPT higher by nearly 6% over just the past month while the MSCI Emerging Markets Index is up 1.7% over the same period.

“EGPToffers a unique and easy way to access the Egyptian stock market. As of June 2014, MSCI classified Egypt as a secondary emerging market. The EEM, iShares MSCI EM ETF allocates roughly 0.16% towards the country so it’s a trace amount. Therefore, the ETF offers a great opportunity to EM investors to de-correlate from the wider MSCI EM Index,” according to Emerging Equity.

In June, Egypt dodged a demotion to frontier market status when index provider MSCI said it was no longer considering the North African nation for such a move.

“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. [Egypt Dodges Frontier Demotion]

“On the technical front the ETF looks expensive and its positive momentum has been fading away, although still trading above its three moving averages. The ETF has been in a strong rally mode since mid 2013. Recently after hitting the maximum price of $74.56 the etf could be due to a short term correction. It could be a good moment to sell and buy it again when it trades within the range of $63 and $65,” according to Emerging Equity.

EGPT has added $6.44 million in assets this year, bring its assets under management tally to $71.4 million as of Aug. 15.

Market Vectors Egypt Index ETF


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.