The Turkey-related ETF has been enjoying a strong rally in recent weeks as more adventurous investors showed increased interest in riskier areas of the global markets to find opportunities.
The iShares MSCI Turkey ETF (NasdaqGM: TUR) increased 12.8% over the past month, compared to the 3.4% gain for the S&P 500.
Turkish stocks jumped and touched a 19-month high this week, and analysts anticipate the rally will maintain its momentum in the short-term, Daily Sabah reports.
According to analysts, President Recep Tayyip Erdoğan’s White House meeting with President Donald Trump last week, along with the opening of dialogue between Turkey and the U.S., could help dispel uncertainty over Turkish lira assets for the remaining part of the year after a period of political-induced risk-off selling.
Anastasia Levashova, a fund manager at Blackfriars Asset Management, believed that the principle of “no news is good news” holds for stock markets, with Erdogan’s recent White House visit generating few headlines, Bloomberg reports.
“It seems like behind the scenes there’s some mutual understanding and talks are going on,” Levashova said. “Cyclically, inflation is improving. So at the end of the day, the current calm is what has been driving the rally.”
Positive Developments for Turkey
Analysts also argued that positive developments over the current account deficit, the rebalancing process in the economy, recent interest rate cuts and optimism over U.S.-China trade negotiations further strengthened the rally in riskier emerging market assets like Turkey.
Further adding to the rally in Turkish assets, the strength in the lira currency and the country’s 5-year credit default swaps dipping to 300 basis point, its lowest since March, were among other factors that helped support investment demand for the market.
However, some still warn of lingering risks that could derail the rally. Investec Plc trader Julian Rimmer argued that while investors’ deepest fears averted for the time being, sanctions still represent the greatest of those threats.
“The market seems to have become more phlegmatic about geopolitical risks, which it has parked for the time being,” Rimmer told Bloomberg. “This is dangerous, however, because none of them has been resolved. International investors remain wary of these vulnerabilities, and so they should.”
For more information on the Turkish markets, visit our Turkey category.