Nearly 400 exchange traded funds hit 52-week lows last Friday and plenty of those were diversified and single-country emerging markets funds. The iShares MSCI Turkey ETF (NYSEArca: TUR) was part of that dubious group.
After losing 2% last week, TUR, the lone Turkey ETF, is off 7.6% over the past month and the fund is again facing geopolitical challenges as a recent terror attack in Turkey is seen as stifling the country’s terrorism industry. Last week, a suicide bomber killed 10 and wounded 15 in an Istanbul attack.
“” The speed with which Turkish security officials managed to identify the suicide bomber was surprising. However, this is reportedly due to the fact the individual had registered in Istanbul as a refugee on 5 January, together with four other Syrians, giving his fingerprint … Domestically, Turkey still perceives the Kurdistan Workers’ Party (PKK) as the greatest threat to its national security … With significant time, resources and attention focused on the PKK, the fight against ISIS will remain a secondary priority domestically. Turkey, as a result, will remain extremely vulnerable to further attacks by ISIS or ISIS sympathizers throughout 2016,” according to a Eurasia Group note posted by Dimitra DeFotis of Barron’s.
Turkey has been tackling a number of economic issues. The country has been suffering an economic downturn due to greater political instability, a struggle against threats from the Islamic State and a renewed war with Kurdish militants in its southeast, reports Michelle Mark for the International Business Times.
Currently, Turkey is experiencing rising inflation, slowing growth, increased fiscal expenditures, high unemployment and a dip in export competitiveness. The economy is expected to only expand 3% this year.
For the daring bargain hunter, Emerging Equity recommends TUR “as a satellite position within a global world or a global emerging markets or a more local EM strategy strategy. Investors should always check the allocation of the country within their underlying benchmark in order to play it on a tactical basis.”
However, Turkey, a net oil importer, has derived little benefit from lower oil prices as evidenced by the aforementioned slowing economic growth.
“Turkey’s tourism sector has already suffered in 2015 due to the downturn in the Russian economy, causing a fall in revenues from $30 billion in 2014 to $28 billion in 2015. Escalating political tensions with Moscow were already going to make things worse for the sector’s performance in 2016, and the recent ISIS attack will only add insult to injury,” according to the Eurasia Group note posted by Barron’s.
iShares MSCI Turkey ETF
