More Reasons To Avoid Egypt ETF?

Well documented is the fact that the Middle East is a

and that volatility can impact other nations thousands of miles away. The equation is simple: Political tensions escalate in the Middle East, oil prices jump and the West is viewed as a loser under that scenario. Another loser, or shall we say continued loser, could be the Market Vectors Egypt ETF

. In late February, we speculated the ETF was

adding that elections this year could be a real hurdle for the fund to deal with. When we highlighted EGPT in late February, the fund was flirting with $14. It closed at $12.28 on Thursday and one more down day for the frontier market ETF could send it below its 200-day moving average and psychological support at $12. There are new concerns that could hinder EGPT ahead of May's elections in Egypt. Presidential candidate Hazem Abu Ismail could be disqualified if rumors are confirmed that his mother once held U.S. citizenship,

. Give Egypt credit: The country looks like it has evolved enough to pick up some solid opposition research practices. Sarcasm aside, Abu Ismail's possible departure from the race would probably mean a clear path to victory for Khairat el-Shater, the Muslim Brotherhood's candidate. That wouldn't be so bad if the Muslim Brotherhood were a warm and friendly organization, but it's not. The group promised not to nominate an extreme candidate, but Khairat el-Shater is viewed as a hardliner and some observers are concerned this could result in the imposition of Islamic law in Egypt. The brotherhood has been in the U.S. and Europe on what the Australian astutely dubbed a "charm offensive" if for no other reason than that Egypt needs Western financial resources to rebuild its economy, alone a sound fundamental reason for avoiding EGPT. And if all of this doesn't convince one that EGPT still has issues ahead of it, then consider this: Following the dismal of the Mubarak regime, the highest EGPT has traded was a tad over $14 in early March. The ETF was flirting with $19 when political violence erupted in Egypt in January-February 2011.