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By: The ETF Professor

Exchange traded funds tracking South Korea, Taiwan and the Middle East are not the only ones being affected by index provider MSCI's (NYSE:MSCI) annual market reclassification, which was revealed Tuesday after the close of U.S. markets.

While the iShares MSCI South Korea Capped Index Fund (NYSEARCA:EWY) and the iShares MSCI Taiwan Index Fund (NYSEARCA:EWT) are trading only slightly lower after MSCI, as expected, kept those countries as emerging markets, another pair of ETFs is being taken to task by investors following the MSCI news.

Shares of the Global X FTSE Greece 20 ETF (NYSEARCA:GREK) are down 2.6 percent and are trading at the lowest levels in six weeks after MSCI became the second index provider to demote Greece to emerging markets status from developed market.

"MSCI will reclassify the MSCI Greece Index to Emerging Markets as part of the November 2013 Semi-Annual Index review," said MSCI in a statement. "The MSCI Greece Index fails to qualify on several market accessibility criteria."

MSCI noted that developed markets "reflect continuous market improvements introduced by authorities in other countries over the years," but that few of the those improvements are reflected in Greece. Greece fails to meet MSCI criteria on securities lending, short selling, lending facilities and transferability. The index provider added that the MSCI Greece Index has not met its standards for developed market status for the past two years, according to ETF Trends.

Indeed, Greece's demotion to developing market is newsworthy, but it is not the epic event that some mainstream media outlets would lead investors. After all, and as was just noted, MSCI is not the first index provider to demote Greece. Russell Investments did the same in March.

GREK proceeded to tumble after that and if the ETF closes below $16 today, it will be the first time in two month it has done so.

GREK is not the only ETF being hit by MSCI's comments. The Market Vectors Egypt ETF (NYSEARCA:EGPT), which is already dealing with ample domestic and regional drama, is down 3.6 on above average volume after MSCI said the North African nation is on review for a possible demotion to frontier market status from emerging market.

Such a move is possible as MSCI proved by lowering Morocco from emerging market to frontier. Among other issues, MSCI cited the previously reported issue of Egypt's dwindling foreign currency reserves as one reason the country is in danger of losing its emerging markets status.

The index provider said it is "closely monitoring" the situation in Egypt and added that it might be forced to launch a public consultation with the investment community regarding Egypt's place in the MSCI Emerging Markets Index. As it is, Egypt accounted for just 0.13 percent of the iShares MSCI Emerging Markets Index Fund (NYSEARCA:EEM) at the end of the first quarter, according to iShares data.

This is how poorly EGPT is reacting to the specter of Egypt becoming a frontier market: Not only did the ETF touch a new 52-week low today, but the fund is trading below the worst levels seen following the 2011 Arab Spring.

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Source: Greece, Egypt ETFs Hit Multi-Month Lows On MSCI News