Shares of the Market Vectors Egypt ETF (NYSE:
) are off 7.3 percent on volume that surpassed the daily average
less than three hours into Monday's trading session. Egyptian
President Mohammed Morsi granted himself wide-ranging legislative
powers. Over the weekend, Egyptian stocks plunged 10 percent,
representing the worst-one day decline for the country's equities
since the Arab Spring of 2011.
Critics view the Morsi power grab as a threat to democracy in
the North African nation. Earlier this year, Morsi became Egypt's
first democratically-elected president. Morsi has essentially
grabbed control of Egypt's court system, saying in the process
that rulings by the nation's judges cannot supersede his own
Supporters assert Morsi made the move because Egyptian courts
are littered with appointees of former President Hosni Mubarak
and that those judges are
hampering Egypt's move to democracy
. Some outsiders, and Egyptians as well, fear Morsi's control
over the country's judicial branch could hasten a move to a more
conservative religious state such what is seen in Iran.
As for the Market Vectors Egypt ETF, the headlines continue a
spate of recent trouble for the ETF. Prior to this past weekend,
the previous weekend saw Egyptian equities
suffer their worst performance in four months
. That decline came amid another conflict between Israel and
Hamas, indicating regional drama was finally catching up to EGPT,
something that had no affected the ETF earlier this year. For
example, the ETF actually surged on September 11 when protesters
stormed the U.S. embassy in Cairo.
Morsi's judicial power grab jibes with comments he made in
early October when he said the government is looking to recoup
money from unidentified firms. Amid a widening deficit and
depleted foreign reserves,
Morsi's gambit to press Egyptian companies for
is seen as affecting some Egypt constituents such as Orascom
Construction and real estate firm Talaat Moustafa.
Further interference by the Morsi administration could impact
foreign direct investment and plague Egypt's domestically-focused
economy, one that is already suffering from rampant poverty and
After spending much of 2012 being one of the best-performing
, EGPT has finally proven vulnerable to domestic and regional
woes. In the past month, the ETF has plunged 14.3 percent. Just
over two months ago, the fund had over $61 million in assets
under management. A week ago, that number had fallen to $56.1
million. At the start of trading today, the number was down to
according to Market Vectors data
Today's drop has taken EGPT below its 200-day moving average.
That is a bearish sign and by the looks of EGPT's chart, next
support may be the August lows around $12.
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