Turkey has long been heralded for its unique East-meets-West culture, as well as its attractive growth potential and geostrategic importance. In recent days, however, massive strings of protests and civil unrest have put investors on edge about the emerging economy. In a statement on Tuesday, Turkish officials emphasized the negative impacts to the country’s reputation and financial stability that they say these protests have caused [see Single Country ETFs: Everything Investors Need To Know].
Investors have been quick to respond to these events; Turkish equities have tumbled and the country’s domestic currency, the lira, has come under tremendous pressure, forcing Turkey’s central bank to implement short-term monetary policies to stabilize the lira. And while the scope and severity of these protests are still unknown, investors may want to take advantage of the recent pullback – if they are willing to stomach the risk.
Over the trailing 1-month period, iShares’ MSCI Turkey Investable Market Index Fund (TUR, A-) has fallen nearly 17.5%; year-to-date the fund is down 6.75%. The ETF’s 200-day volatility comes in at 27.55%, while its 5-day volatility has surged to over 125% (data as of 6/11/2013).
In 2012, however, TUR clocked in an attractive 65.63% gain, and over the trailing 1-year period, the fund is up over 30% [see Euro Free Europe Portfolio].
From a fundamental perspective, investments in the Turkish market still hold appeal. In Q1 of 2013, Turkey’s economy expanded 3.00% (annual growth rate), a significant uptick from the previous recording of 1.4%. Over the years, the country has also developed thriving industrial and service sectors, and has become one of the top destinations for foreign investments.
For those thinking this may be a prime buying opportunity, the MSCI Turkey Investable Market Index Fund (TUR, A-) is currently the only “pure play” ETF option. There are, however, several ETFs that offer meaningful exposure to Turkish equities:
- ALPS/GS Momentum Builder Growth Markets Equities and U.S. Treasuries Index ETF (GSGO, n/a)
- Accuvest Global Opportunities ETF (ACCU, C)
- SPDR S&P Emerging Europe ETF (GUR, A-)
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Disclosure: No positions at time of writing.