After testing its long-term support level on a precipitous sell-off in response to a political power struggle this week, the Turkey exchange traded fund (ETF) rebounded Thursday.
The iShares MSCI Turkey ETF (NYSEArca: TUR) rose 1.8% Thursday after plunging 12.9% over the past three sessions, which briefly sent TUR below its long-term, 200-day simple moving average.
Turkish markets initially plunged this week after the ouster of Prime Minister Ahmet Davutoglu raised concerns over the economy’s future outlook, reports Yeliz Candemir for the Wall Street Journal.
President Recep Tayyip Erdogan’s ongoing power play to control the Justice and Development Party, or AKP, is seen by some market observers as a significant impediment on Turkish assets.
“Markets have taken significant discomfort from the blurry political atmosphere,” Sertan Kargin, chief economist at Global Securities, told the WSJ. “Turkish politics are now sailing into ‘uncharted waters’ at least for the next couple of months.”
The World Bank projects annual growth to slow to 3.5% this year from 4% in 2015. The government change up may also complicate matters for central bank Governor Murat Cetinkaya as Ankara could press for further rate cuts to bolster economic growth, which may leave the economy open to external shocks, a depreciating lira and inflationary pressures.[related_stories]