Against a challenging backdrop, the iShares MSCI Turkey ETF (NYSEArca: TUR) is up 9% year-to-date. While the performance of the lone exchange traded fund dedicated to Turkish stocks lags that of the MSCI Emerging Markets Index, it is still solid when considering data suggest economic growth there is slowing.
Some market participants believe political risk in Turkey exceeds that of other emerging markets, meaning it is too soon for investors to consider supposed bargains in Turkish stocks. Additionally, there are lingering concerns the country could be tagged with another credit downgrade this year.
Furthermore, the increased security risks also pressured investors’ outlook, notably the Islamic State claimed that the New Year’s attack at the Reina nightclub shortly after Istanbul rang in the new year.
The good news is that a rally could be coming for Turkish stocks following Sunday’s constitutional referendum.
“That’s the opinion of Bank of America/Merrill Lynch analysts Ferhan Salman, Gabriele Foa & David Taranto, who reflect on Turkey’s constitutional referendum to be held Sunday, April 16. Citizens face a yes-no vote on more than a dozen constitutional changes that would give longtime leader and current President Recep Tayyip Erdogan more power,” reports Dimitra DeFotis for Barron’s.