By the metrics of geographic size and population, Cyprus is
small. It is merely the third-largest island in the Mediterranean
Sea. The country is home to just over 1.1 million, making it
smaller than Sicily and Sardinia by both area and population.
Cyprus' diminutive status has not stopped it from being a big
thorn in the side of global equity markets over the past few
days. With Cypriot lawmakers looking poised to reject a
controversial levy on bank deposits aimed it shoring up the
country's ailing financial systems, fears are high that Cyprus is
teetering on the brink of bankruptcy and possible expulsion from
While Cyprus is a tiny country with a relatively small
economy, and one not large enough to warrant a Cyprus-specific
ETF, negative headlines out of the country have had a
predictable impact on some marquee Europe
With that in mind, goings on in Cyprus are also having an
adverse impact on a surprising group of
, including the following.
Market Vectors Russia ETF (NYSE:
) It is widely known that Russian oligarchs stash plenty of cash
in Cyprus and Russia has previously provided financial assistance
to the island nation, including a loan of EUR2.5 billion in 2011.
So it is not surprising Russia is none too please with the plan
to tax deposits made in Cyprus-based banks.
What is surprising, at least somewhat, is the adverse reaction
to this scenario by the Market Vectors Russia ETF. Unlike its two
smaller rivals, RSX has some slight exposure to Cyprus. Emphasis
on "slight." As of February 28, RSX, the largest Russia ETF by
assets, had a 1.3 percent weight to Cyprus,
according to Market Vectors data
Accounting for Monday's session and just half of Tuesday's
action, RSX is down more than five percent. Translation: In less
than two full trading days, RSX's percentage loss is roughly
triple its exposure to Cyrpus.
Global X FTSE Greece 20 ETF (NYSE:
) The Global X FTSE Greece 20 ETF making this list is arguably
not as surprising as RSX. After all, Greece is not too far away
from Cyprus, so GREK could be viewed as a "guilty by proximity
play." Interestingly, it is $4.5 billion in bad Greek debt owned
by Cypriot banks that is contributing to Cyprus' imperiled
On an even more practical level, Greece and Cyprus have an
intimate trading relationship. Greece is Cyprus' third-largest
export partner and second-largest provider of imports,
according to the Cypriot Embassy
. In the past five days, GREK has plunged nearly eight
iShares MSCI Italy Index Fund (NYSE:
) Another proximity play, the iShares MSCI Italy Index now faces
a tenuous technical situation thanks to Cyprus' woes. EWI is down
"just" 1.1 percent, a performance that is far better than what
traders are seeing in GREK and RSX, but EWI's loss has it
flirting with critical support at $12.
Already trading slightly below its 200-day moving average, a
bearish sign in the eyes of many technical analysts, a break
below $12 could easily take EWI back to its August lows of around
$10. Indeed, a bad Cypriot economy is bad for Italy. Italy is
Cyrpus' third-largest import partner behind the U.S. and
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