Major Trouble Ahead For The Egypt ETF?

Prices of the best barometer we have for sentiment on the country, EGPT, were down sharply in Wednesday trading and there is widespread speculation that the worst of the current crisis is not over. Many had hoped that the country would be able to persevere and that the economy would grow after the ousting of Morsi—who presided over a very low growth environment—but this is clearly not going to be the case in the short term.

Bottom Line

More volatility seems ahead for the country, and turmoil could seemingly come around any corner, so the nation might still be one to avoid. For this reason, we are maintaining our Zacks ETF Rank of 4 (Sell) on this fund, and are looking for it to underperform peers in the future as well (see the full list of Top Ranked ETFs).

While it is true that EGPT has held up pretty well so far this year—and has actually outperformed markets like Brazil even with the coup/revolution in Egypt—a new leg downwards could be at hand soon enough. And given how little EGPT has lost so far this year, one has to believe that some significant pain could be ahead for investors in this ETF, unless the situation gets under control very soon in Egypt.

This article is brought to you courtesy of Eric Dutram.

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