The iShares MSCI Turkey ETF (NYSEArca: TUR), the lone exchange traded fund dedicated to Turkish stocks, saw its share of controversy and downside following a failed coup against President Recept Tayyip Erodgan (pictured above) last month, but TUR has been attempting to rally.
Looking to allay foreign investors’ concerns, Turkey’s central bank lowered interest rates by 25 basis points to 8.75% and said it stands ready to provide liquidity to the country’s banks, if needed, an important factor considering TUR’s weight to financial services stocks is almost 44%, or more than triple the ETF’s second-largest sector allocation.
SEE MORE: Turkey ETF Tumbles Following Failed Coup
Although TUR has recently notched some gains, the ETF has a long way to go to recoup all of July’s losses and there is still looming controversy.
“In the latest turn of events Thursday, Turkey again asked the U.S. to arrest and extradite Fethullah Gulen, according to the state-controlled Anadolu Agency. Turkey accuses Gulen, an imam living in Pennsylvania, of orchestrating the coup. Gulen has condemned threats to Turkey’s democracy and denied the charges,” reports Dimitra DeFotis for Barron’s.[related_stories]
Following the July coup attempt, S&P Global Ratings cut the country’s sovereign debt rating to BB/B on concerns over an increase in political risk after the failed putsch, reports Bloomberg.
Moody’s Investors Service also put a number of companies on review for a downgrade and is reviewing the sovereign for a possible downgrade.
“S&P’s action may increase market expectations of a downgrade to sub-investment grade by Moody’s,” JPMorgan said, Reuters reports.
Erdogan has also declared a three-month state of emergency to in response to the failed coup. The administration is pursuing those accused of being behind the coup and has arrested thousands of army officers, judges, teachers and prosecutors.
According to the Wall Street Journal: Gulen’s followers “in 2014 started using ByLock, an encrypted messaging app, according to senior Turkish intelligence officials. … The Turkish spy agency shared the decrypted files with other government ministries … Days later, on March 21, Turkish analysts saw a YouTube video that showed Mr. Gulen wearing for the first time a khaki robe the same green hue used by the army. Analysts at MIT believed he was signaling his followers in the army, but they had no idea what. A person close to the Gulen group said such speculation was unfounded.”
For more stories on the lone Turkey ETF, visit our Turkey category.
iShares MSCI Turkey ETF