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. Turkish stocks are viewed as inexpensive to the broader emerging markets universe although earnings estimates for some companies there are rising.
Related: More Tumult for Lone Turkey ETF
Still, as the note posted by Barron’s points out, Morgan Stanley also has concerns about some emerging markets banks, including Brazilian, Indian and Eastern European names.
Although Brazilian stocks have rallied this year and banks in Latin America’s largest economy appear inexpensive, those institutions are faced with declining consumer credit quality. Additionally, some Brazilian states have recently delayed payment to public workers, potentially crimping the ability of those workers to repay loans taken from Brazilian banks.
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