Tumult for Turkey ETF Could Spell More Trouble

The iShares MSCI Turkey ETF (NYSEArca: TUR), the lone exchange traded fund dedicated to Turkish stocks, has a reputation for volatility, which is to say TUR does not need external help to be one of the more volatile single-country emerging markets ETFs.

However, TUR and Turkish stocks have dealt with heaping amounts of controversy and volatility this year, much of it arriving in the wake of July’s failed coup against President Recept Tayyip Erodgan.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.

SEE MORE: Turkey ETF Tumbles Following Failed Coup

Although it is down more than 4% over the past month, TUR is still higher by nearly 7.5% year-to-date, but some market observers continue to urge caution on Turkish stocks while pointing to the country’s now slack GDP growth.

“Turkey (a country widely perceived by investors to be a great EMEA growth story), that the country has basically stagnated at around $9,500 GDP per capita for the last decade, despite adopting generally pro-growth policies,” according to a Renaissance Capital note posted by Dimitra DeFotis of Barron’s.


Last month, Fitch Ratings opted against downgrading Turkey’s sovereign credit rating. 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.