Shares of the iShares MSCI Israel Capped Investable Market
Index Fund (NYSE:
EIS
) are off 2.2 percent and trading at the lows of the day on news
that Ahmed Said Khalil al-Jabari and another Hamas official were
killed during an Israeli airstrike on the Gaza Strip. Volume in
the iShares MSCI Israel Capped Investable Market Index Fund, the
lone Israel-specific ETF, is close to double the daily
average.
The Israeli strike follows a rash of attacks against the
country by the Palestinian Islamist group Hamas. Militants in
Gaza have fired more than 110 rockets towards southern Israel
since Saturday, when four soldiers were wounded in an anti-tank
missile attack on an Israeli army jeep,
the BBC reported
.
News of the strikes is also pressuring the Market Vectors
Egypt ETF (NYSE:
EGPT
), which is off 0.75 percent in midday trading on thin
turnover.
The iShares MSCI Israel Capped Investable Market Index Fund,
which has almost $80 million in assets under management, also has
a mixed history of post-conflict performance
.
For example, the ETF actually rallied during a 2008
Hezbollah-lead conflict that caused dozens of deaths in nearby
Lebanon. EIS debuted just two months before that event. In 2010
following Yemen's crackdown on al-Qaeda EIS proceeded to trade
below $50 by the time the first battle of Lawdar ended in late
August 2010.
Last year, the ETF started to falter when the Arab Spring
movement gained steam. From February 18 through the end of the
year, EIS plunged almost 31 percent. This year, more than 2,900
deaths were reported in June and nearly 2,800 in July in Syria.
EIS bottomed around $35 in July and proceed to trade above $43 by
mid-October.
However, the latest round of violence to afflict an already
tenuous region could technically damaging to EIS. News of the
latest offensive against Hamas has sent EIS below its 50-day
moving average. The ETF is trading just one percent above its
200-day line and that is relevant because many technical analysts
believe it is a bearish sign when securities violate long-term
moving averages.
Making matters trickier for investors in EIS is harsh rhetoric
from both sides. Israel has said its anti-Hamas offensive could
be escalated Hamas spokesman Abu Zuhri said: "Israel will regret
the moment they even thought of doing this," the BBC
reported.
While Egypt is not directly involved in this conflict, the
Market Vectors Egypt Index ETF (NYSE:
EGPT
) could also be vulnerable to added downside. The ETF has proved
resilient to regional strife this year. EGPT even rallied on
September 11
as protesters attacked the U.S. embassy in
Cairo
.
However, investors' appetite for risk appears low at the
moment and after flirting with $16 in September, EGPT is now
trading below $14.75. That fund also fell below its 50-day moving
average earlier this month.
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.
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