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Turkey ETFs
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About Turkey ETFs |
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Turkey ETFs Overview and forecast
Turkey's small ETF market is an interesting study. ishares has used its model of two quite different ETFs. There's one basic traditional ETF iShares MSCI Turkey Investable Market Index Fund (AMEX:TUR) and its British relative, iShares MSCI Turkey ETF (LSE:ITKY) a very high unit value ETF, for the Turkish market, and what's emerged is a picture of a highly active trading market.
Surprisingly, TUR has shown not only good volumes in what is generally considered a low capital investment market, but significant upside in its moves in the first two quarters of 2009. TUR was created just before the start of the market crash, and like other global ETFs sailed on sedately until it went over the edge during the 2008 meltdown.
What's really interesting is that the recovery from lows of around $20 in March 2009 went up to $35 by the end of June, and has sustained quite good volumes by the standards of its market. It looks like traders are maintaining a strong interest in TUR, and with good reason. As a trading effort, the $15 margin on a low of $20 is a very respectable performance.
Short term (6 months)
The difficulty in assessing the Turkish market is that this is considered a low capital market by global standards. A sustained upside is a comparative rarity with TUR, and it usually comes with a few peaks and troughs historically. The logical view would be that the current upswing will result in a correction, but that's not set in stone.
Trading interest seems to have picked up in the lower price ranges. An equally logical view would be that traders are sustaining price levels, unlike the relatively low volume era in the higher price ranges. That means that the market can support the present prices to some degree. However, a repeat performance of the second quarter of 2009 looks unlikely. The overall view is either a significant correction in the short term, or a shallow, longer downward move.
Medium term (2 years)
This is a new ETF market, and although the obvious interest in TUR shows promise, expectations of this market have to be realistic. It is possible that the Turkish ETFs will continue to grow well, but the recession isn't likely to help in the medium term. These are medium sized ETFs, not highly capitalized by global standards, and what they can do with what they've got is the real issue.
It is quite possible that there is an emerging upside for the Turkish ETFs, but the recession has blurred the picture. It's not clear to what extent the Turkish capital market can develop for ETFs under these circumstances. The domestic retail market, energetic as it is, is also relatively small. A more conservative view would be for modest upsides during the medium term.
Long term (5 years)
Turkey, to outsiders, is a pretty opaque place, politically and economically. Nothing is particularly clear. The country is also subject to a range of domestic issues The economy isn't a modern economic model in many respects, and the EU membership situation has yet to be decided.
The investment market is no clearer. The Turkish ETFs hold a strong group of local corporate stocks, but the appeal to foreign investors is naturally limited. Turkey, by not being in the EU, isn't part of that wider investment market, and isn't a logical place for investment spreads in the European market.
Qualifiers to projections
Turkey's edgy politics do have ramifications for investors. The potential downsides in any real political crisis could be drastic for the capital markets. Foreign money could desert them instantly. That would pull the plug on prices for investors, in the most gruesome possible way.
Investors are strongly advised to thoroughly familiarize themselves with both the investment and political environments. The dynamics of the ETF market also need to be studied, because this is quite a unique trading market. There's money to be made in the Turkish ETFs, but investors do need to be very clear about how and when to commit capital.
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Last Updated on: 2010-01-14 02:03:40 |
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