The rise of the Arab Spring has yet one more one setback. As an outsider, passing judgment is often difficult and likely too biased to offer much insight. What is obvious is that from an outsider’s view it sure seems like Egypt might be right back to where it was when Mubarek ran the country. President Mohamed Morsi’s efforts over the weekend put the Muslim Brotherhood president assigned powers to himself which are likely back to dictatorial powers.
The powers under question are the sacking of the equivalent of the Attorney General and also making decrees immune from legal oversight until Egypt’s new constitution takes hold. Riots have sent the markets south all over again even though the new powers are said be only temporary.
Initially it seems to soon to tell just how this will play out in the end. Still, this story sounds very familiar. Dictatorship, Muslim Brotherhood, riots and protests, and on.
With the Western powers not exactly being favorable to a new dictatorship that is under the Muslim Brotherhood, the sell-off should really be no real surprise.
The Market Vectors Egypt Index ETF (NYSEMKT: EGPT) closed down a whopping 7.6% at $13.02 today, with a 52-week range of $9.24 to $15.99. This drop would be the equivalent of drop in the DJIA of barely under 1,000 points in a day. We would advise that this ETF may trade like a closed-end fund when the markets are volatile. When this fund was trading last year during the Mubarek ouster the ETF lost its index and traded solely based upon supply and demand under a specialist or market maker.
JON C. OGG