Big surprise: Investors piling into Egypt ETF

Big surprise: Investors piling into Egypt ETF
Flows into Van Eck could be due to some shorting, though other investors may sense potential buying opportunity; country 'too big to fail'
FEB 07, 2011
Despite the massive unrest in Egypt, investors are piling into the one exchange-traded fund that is 100% invested in the country. Since early Friday — which was the second day that the Egyptian stock market was closed due to mass protests — assets in Van Eck Global’s Market Vectors Egypt Index ETF Ticker:(EGPT) has jumped to $24 million, from $11.65 million. At the same time, the ETF’s return is down about 20% year-to-date. From Jan. 25, when the mass protests demanding the ouster of President Hosni Mubarak began, through Jan. 28, the ETF’s return dropped 13.47% alone. “Some investors clearly see a potential opportunity,” said Ed Lopez, director of marketing at Van Eck. “It will be interesting to see how this plays out.” The ETF is trading at a 10% premium. Van Eck today said that it has suspended creation orders for the ETF but will continue to accept redemption orders, which could cause the portfolio to trade at a greater premium, observers said. With the Egyptian stock market now closed for the third straight day, the ETF is the only way to access the market, said Dave Nadig, director of research at IndexUniverse. “This could be people who want to short Egypt, but also there are plenty of people who want to be invested in Egypt right now,” he said. “Talk about a country that is too big to fail; the U.S. government isn’t going to let this country go down.” Because the Egyptian market is closed, much of the new $12 million that the Van Eck ETF received Friday is in cash, though a couple of securities trade on the London Stock Exchange, Mr. Lopez said.
ETF 30-day ADV AUM (millions) TRR 1/25 to 1/28 EGYPT
Market Vectors Egypt Ticker:(EGPT) 88243.2 10.9 -13.5 100.0%
Market Vectors Africa Index Ticker:(AFK) 48640.2 107.5 -7.3 24.9%
PowerShares MENA Frontier Countries Portfolio Ticker:(PMNA) 27408.8 21.8 -6.7 21.2%
Guggenheim Frontier Markets Ticker:(FRN) 186518.0 242.0 -3.5 12.6%
WisdomTree Middle East Dividend Ticker:(GULF) 20642.0 20.3 -2.7 11.0%
SPDR S&P Emerging Middle East & Africa Ticker:(GAF) 41676.1 175.7 -5.2 5.8%
Source: IndexUniverse

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