Egypt ETF Soars as Morsi's Control Appears Tenuous
Shares of the Market Vectors Egypt ETF (NYSE: EGPT) soared late in Wednesday's shortened U.S. trading session on news the Egyptian military has wrested control state television as a deadline imposed for President Mohammed Morsi to compromise with protesters or relinquish power has come and gone.
As expected, protests in already fractured Egypt started gaining steam on June 30, the one-year anniversary of Morsi's rise to power. Morsi, a member of the controversial Muslim Brotherhood, claims he was democratically elected, but his time in power has been marred by ongoing protests and a sagging economy.
Egypt, North Africa's largest economy, is home to double-digit unemployment, but the rate of joblessness among the nation's young people is well above 20 percent. The Egyptian economy has deteriorated so rapidly under Morsi's leadership that last month index provider MSCI (NYSE: MSCI) said Egypt is on review for a possible demotion to frontier market status. MSCI currently classifies Egypt as an emerging market.
At least 16 protesters have been killed and 200 injured in recent days. Reuters reported that a national security adviser to President Morsi said a military coup was already under way. The agency also reported that authorities had placed a travel ban on Morsi and other Muslim Brotherhood leaders, according to CNBC.
News of Morsi's possible loss of power has been a boon for EGPT. The ETF surged almost six percent Tuesday on volume that was more than six times the daily average and the lone Egypt ETF is up another four percent Wednesday on volume that is nearly quadruple the daily average.
EGPT was reverse split on a one-for-four basis on Monday.
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