Talking Turkey: Reasons to Like the Turkey ETF

The iShares MSCI Turkey ETF (NYSEArca: TUR) started this year on a torrid pace, but even with a big drop last month, the lone exchange traded fund dedicated to Turkish equities is up 12.3% year-to-date compared to again of 6.9% for the MSCI Emerging Markets Index.

Earlier this year, Turkish markets rallied after Prime Minister Binali Yildirim stepped up and announced a cabinet that signaled policy continuity, with top members of the economic management team including Deputy Prime Minister Mehmet Simsek, whom was favored by foreign investors as a reformer, Reuters reports.

Investors believe Simsek will maintain fiscal discipline and act as a buffer to Erodgan’s push against orthodox monetary policy.

Related: Lone Turkey ETF on a Wild Ride After Political Volatility

Citigroup recently had some positive things to say about select Turkish equities.

“More Breathing Room from the Fed last week … is particularly helpful to Turkey, given it allows yield-chasing investors to turn a blind eye (at least for now) to Turkey’s well known vulnerabilities,” according to part of a Citi note posted by Dimitra DeFotis of Barron’s. “Positive Economic Momentum:  Unlike other emerging markets (where economic data has in general disappointed), upside surprises have been a consistent story from Turkey over the last year, as economist’s dire predictions on Turkey’s economic picture have failed to materialize.”


Looking ahead, Turkey still faces growing risk from investment outflows as the U.S. Federal Reserve normalizes interest rates.