After Moody’s Investors Service’s decided to delay its decision on Turkey’s credit rating, investors jumped back into the emerging market in search of higher yields, pushing the country-specific exchange traded fund above its long-term trend line.
The iShares MSCI Turkey ETF (NYSEArca: TUR) rose 3.0% Monday, testing its resistance at the 50- and 200-day simple moving averages.
Turkish stocks rallied and were the best performing emerging market on Monday after Moody’s said it would keep assessing the medium-term impact of the failed putsch, diminishing concern that it would issue a knee-jerk downgrade on Turkish debt, reports Tugce Ozsoy for Bloomberg.
“No news is considered rather as good news in light of the boost major high-yielding currencies are getting,” Luis Costa, a strategist at Citigroup Inc., told Bloomberg. “The markets are now deleting the chances of a deep growth scare in the U.S. economy. This is positive for emerging-market currencies, especially the high-yielders, such as the lira.”[related_stories]
Moody’s originally put Turkey’s debt on review for a downgrade on July 18 in response to the failed coup attempt that threatened to destabilize the emerging economy, arguing that it “is likely that [the coup attempt]will exacerbate existing challenges” for Turkey’s policymaking institutions and business climate, resistance to potential shocks, and growth prospects, the Financial Times reports.