Turkey: iShares MSCI Turkey ETF (TUR)
Next on the list is Turkey via the iShares MSCI Turkey ETF (TUR).
I have been a big believer in the Turkey macro story for quite some time, and I chose a Turkish stock in InvestorPlace’s Best Stocks contest last year. (I came in second place, by the way…and within a single point of first.)
Turkey bridges the gap between developed Europe and the emerging Middle East. It is simultaneously an emerging market with deep economic integration with Western Europe and the West, and an aspiring regional economic power in Eastern Europe and the Middle East.
2013 was a rough year for Turkish stocks. After enjoying a great five-month start, political unrest in May and its close proximity to the Syrian conflict caused investors to sell first and ask questions later. In dollar terms, the Turkish ETF is down nearly 30% from its 2013 highs.
The “taper tantrum” here in the United States didn’t help much either. Turkey has a large current account deficit, which means it depends on portfolio inflows from foreign investors. When the Fed first started making noise about tapering in May, it was as if they yanked the rug out from under all emerging market economies with current account deficits. With the Fed’s liquidity spigot closing off, so the thinking went, the hot money that has kept emerging markets afloat will disappear.
At current prices, these risks would seem to be factored in. Turkish stocks trade for just 9 times earnings.