EGPT Creations Resume As Exchange Reopens

March 23, 2011

EGPT comes back to life along with Egyptian bourse.

Van Eck Global resumed creations of its Market Vectors Egypt Index ETF (NYSEArca: EGPT) after the Egyptian exchange reopened on Wednesday. The New York-based company halted creations in late January amid turmoil in the North African country that led to the closure of the Egyptian stock exchange.

The resumption of trade on the bourse unleashed pent-up selling pressure that pulled Egyptian stocks down 9 percent, according to MarketWatch. EGPT’s share price has fallen $1.25, or 7.5 percent so far today, to $15.35. The ETF trades until 4 p.m. Eastern time on Arca, the New York Stock Exchange’s electronic trading platform.

“Market Vectors Egypt Index ETF will begin accepting new creation orders in accordance with the policies and procedures detailed in the fund’s prospectus and Statement of Additional Information that include the right to suspend creation orders again if necessary,” Van Eck said in a press release issued Wednesday.

Van Eck halted creations on EGPT on Jan. 31, amid widespread unrest that hobbled daily life in Egypt and ultimately led to the end of President Hosni Mubarak’s 30-year rule there. Throughout the seven-week episode, redemptions were still possible, Van Eck stressed in its prepared statement. The country’s military is shepherding a planned transition to democracy in Egypt, beginning with elections this fall.

As of yesterday’s close, EGPT was trading at a 12.8 percent premium to its net asset value, or NAV, according to data compiled by IndexUniverse. The resumption of trade should begin to bring its market price and NAV back together. Indeed, ETFs, unlike closed-end funds, are designed for these two measures of a fund’s value to converge should they ever become disjointed.

Van Eck also noted that two of its other ETFs that also have exposure to Egypt, the Market Vectors Africa Index ETF (NYSEArca: AFK) and the Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC), continued to accept creation orders throughout the tumultuous political transition in the Arab world’s most populous country.

As of Tuesday’s close, EGPT had almost $22.9 million in assets, according to data compiled by IndexUniverse. AFK, which has about 20 percent exposure to Egypt, had $108.8 million in assets, while EMLC, with 3 percent exposure to Egypt, had $286 million.


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