Turkish equities and country-specific exchange traded fund rebounded Tuesday as bargain hunters jumped on an oversold market.
The iShares MSCI Turkey ETF (NYSEArca: TUR) rose 3.1% Tuesday. TUR has declined 17.2% over the past month and fell 34.1% year-to-date.
The Borsa Instabul 100 index advanced 4.1% Tuesday, with the banking sector leading, after a 7.1% fall over the previous three trading sessions dragged the benchmark to its lowest level since March 2014, Bloomberg reports.
“The index is rallying on bargain-hunting buys and covering of short positions in banks and holding companies,” Isik Okte, a strategist at brokerage Teb Yatirim, told Bloomberg.
Financials account for the largest sector in TUR, making up 42.5% of the fund’s underlying portfolio.
On Monday, the Turkish benchmark traded at 7.93 price to 12-month estimated earnings, its weakest valuation in almost four years. TUR showed a 10.01 price-to-earnings and a 1.25 price-to-book. In contrast, the S&P 500 is trading at a 18.54 P/E and a 2.54 P/B.
Turkey’s equity market has been under pressure this year as the prospect of a Federal Reserve interest rate hike fueled capital outflows from emerging markets. Additionally, Turkish stocks recently sold off on heightened tensions in the Middle East, notably the downing of a Russian jet and strained relations with Moscow. [Recovering Turkey ETF Hit With Critical Blow]
“Banks were trading close to or in some instances below the multiples they traded during the global crisis in 2009,” Aykut Ahlatcioglu, an analyst at Oyak Menkul Degerler, told Bloomberg. “It’s normal that we see decent reactionary buying off of these cheap multiples once the heavy global selloff slowed down.”
Technical analysts may have also Turkish markets signaled a potential buying opportunity after Borsa 100’s 14-day relative strength index dipped to 26 Monday, the lowest since August – a reading under 30 suggests a security is oversold and may rebound. After Tuesday’s bounce, TUR currently shows a 14-day RSI of 34.5.
iShares MSCI Turkey ETF
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Max Chen contributed to this article.