iShares MSCI Turkey ETF (TUR)
History buffs will remember that Crimea long ago was a vassal state of Ottoman Turkey. The Black Sea was once an “Ottoman lake” until Russia emerged as a great power in the 18th century. And more recently, Russia and Turkey were Cold War rivals. Turkey, as a Nato member, was the West’s first line of defense … which is a little ironic given the country’s lurch towards political Islam in recent years.
Suffice it to say, Turkey and Russia have a long history. And not surprisingly, Turkey’s market has been largely tracking Russia’s this year.
Not all of the volatility in Turkish stocks can be blamed on the Russia-Ukraine standoff, of course. In fact, most is due to Turkey’s homegrown political crisis involving a corruption investigation into prime minister Recep Erdogan’s family.
Still, as investors return to the region in the weeks ahead, I expect Turkish stocks to follow Russian stocks sharply higher. Like their Russian counterparts, Turkish stocks are among the cheapest in the world — trading for 7.9 times earnings by Financial Times estimates.
But unlike Russia, Turkey is no petrostate. It has one of the most diversified and well-developed markets in the emerging world. The iShares MSCI Turkey ETF (TUR) is heavy in the financial sector, but its largest non-bank holding is international mobile carrier Turkcell (TKC), a leading mobile phone provider in much of the Middle East and Eastern Europe.
I consider Turkey one of the most promising markets of the next ten years, and TUR is one of the best ETFs to buy if you want to profit on its strength.