On heavy volume, the iShares MSCI Turkey ETF (NasdaqGM: TUR) sank nearly 11% Monday, extending a slide that is sending shockwaves throughout the emerging markets space while taking TUR to a new 52-week low.
While Turkey’s economic crisis, one that has seen its lira slide to record lows against the dollar, has investors pensive about emerging markets equities, one emerging markets single-country exchange traded fund is still luring investors. That fund is the iShares MSCI Malaysia ETF (NYSEArca: EWM).
“The Southeast Asian nation’s stock market surged into overbought territory last week and the sole U.S.-listed exchange-traded fund tracking the measure attracted the most cash since 2011. The rally came as investors in developing-nation assets fretted over whether Turkey’s plunging currency would spark a selloff in other countries,” according to Bloomberg.
Problems In Turkey; Malaysia Decent By Comparison
In addition to bonds, the economic issues in Turkey and the geopolitical tensions with the United States also gave the Turkish lira no reprieve, hitting an all-time low of 7.24 against the U.S. dollar. In an effort to prop up the currency, the Turkish central bank lowered the reserve requirement for banks by 250 basis points to improve liquidity conditions.
Investors may be embracing EWM as a low volatility way to wait out the Turkish turmoil. EWM has a three-year standard deviation of 17.16%, more than 900 basis points below the comparable metric on the aforementioned TUR.
“Fitch affirmed Malaysia’s ‘A-‘ rating with a Stable Outlook on 28 March, noting that the election result was unlikely to lead to significant economic policy shift,” said the ratings agency. “The extent to which the new government’s agenda will shift major policy is uncertain, but the PH victory and its policy platform indicate a much greater potential for change. In the meantime, Fitch will monitor the new government’s policy agenda as it evolves.”
EWM is up 1.16% year-to-date.
“The iShares MSCI Malaysia ETF, or EWM, attracted $106 million last week, or almost 20 percent of its total assets, and the Malaysian equity index has recovered 8.7 percent from a July low,” reports Bloomberg.
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