Does Egypt offer an emerging market opportunity?

Despite the sharp spring selloff in the S&P 500, the index is once again near its highs for the year, with a year-to-date gain of almost 12 percent. Interestingly, that performance still isn’t enough for the index to rank among the top 10 performers this year.

Although Egypt suffers from shockingly high unemployment, high-profile kidnappings of tourists, and tumultuous elections, its stock market has outperformed its global peers, as reflected by Market Vectors Egypt ETF’s (NYSE: EGPT) year-to-date gain of 54 percent.

The fact that the US has remained a steady ally of the country has been a significant driver of those gains.

American lawmakers were initially leery of Egypt’s recently elected President Mohamed Morsi and his Muslim Brotherhood party. Because the Muslim Brotherhood is known to harbor a hard-line Islamist faction, many worried that the political group’s rise to power would simply replace Egypt’s former secular dictatorship with a theocracy. For now, those concerns have proved wildly overblown.