The often controversial and volatile iShares MSCI Turkey ETF (NYSEArca: TUR) is up nearly 12% year-to-date and some market observers believe Turkish equities can continue climbing even as the country’s currency, the lira, declines.
Still, Turkey can be one of the most politically volatile emerging markets, a trait that has previously weighed on TUR and Turkish stocks.
Last year, Turkish stocks and TUR tumbled following a failed coup. Turkish markets plummeted on concerns of the implications of the ensuing political turbulence after a failed coup d’etat attempt from the military branch.
In August, Turkey’s central bank lowered interest rates by 25 basis points to 8.75% and said it stands ready to provide liquidity to the country’s banks, if needed, an important factor considering TUR’s weight to financial services stocks is almost 44%, or more than triple the ETF’s second-largest sector allocation.
Following the July coup attempt, S&P Global Ratings cut the country’s sovereign debt rating to BB/B on concerns over an increase in political risk after the failed putsch, reports Bloomberg. Moody’s Investors Service also put a number of companies on review for a downgrade and is reviewing the sovereign for a possible downgrade.