“Our four-factor econometric regression model for Turkey is suggesting 7% upside potential by year end; (ix) Turkey trades at a discount once again versus GEM on sector-adjusted forward earnings and Turkish banks are cheap versus EMEA peers; and (x) there is now 13% potential upside for Turkish stocks to Credit Suisse target prices,” according to a Credit Suisse note posted by Barron’s.
Russia, Turkey and Poland are three of the four lowest P/E emerging markets at the moment. The P/E ratios for those market are 4.6, 9.1 and 11.5, respectively, compared to 11.3 for the MSCI Emerging Markets Index, according to WisdomTree. Not only are those markets cheap compared to a broader emerging markets index, they are deeply discounted by their own historical standards. Russia, Turkey and Poland currently trade at an average of almost 28% percent to their 10-year averages, the WisdomTree data show.
Additionally, GUR has a familiar sector composition for an emerging markets fund. Meaning energy and financials loom larger, as in those two sectors combine for over 61% of the ETF’s weight. Energy and financial services stocks in the MSCI Emerging Markets Index currently traded at discounts of 24.5% and 31.7% to their 10-year averages, as WisdomTree points out, proving that GUR really does offer investors access to Emerging Europe on the cheap.
iShares MSCI Turkey Investable Market ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM.