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.
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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.
The ratings agency, though, believes “events are still unfolding,” which will require additional time to assess the mid-term impact of recent events before making a final decision. Moody’s expects to finish its review by October 16.
SEE MORE: Turkey Stocks, ETF Plunge Following Failed Coup
S&P Global Ratings, though, already lowered the country’s’ credit rating to two steps below investment-grade and warned that increased political uncertainty could continue to push off investors and undermine fiscal management.
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iShares MSCI Turkey ETF