iShares MSCI Turkey ETF (TUR Quick QuoteTUR - Free Report) advanced 5.1% on Oct 15 as the Turkish Lira was up 1.7% against the U.S. dollar — hitting a two-month high. This movement was in anticipation of improving relations between Ankara and Washington (see: all the European Equity ETFs here).

 

The lira which has plummeted nearly 35% this year saw a boost after the court released U.S. pastor, Andrew Brunson after two years. This led to a conflict between the Turkey and Washington. The relative gain was also supported by a weakened dollar due to lower-than-expected retail sales for the month of September (see: Higher Oil Prices to Spell Trouble for These Country ETFs)

 

Hosting Brunson in the White House, U.S. President Donald Trump said his release was "a tremendous step" in American-Turkish relationship and added "We have a chance of really becoming much closer to Turkey, and maybe even having a very, very good relationship.”

 

Washington retaliated with sanctions on Interior Minister Süleyman Soylu and Justice Minister Abdulhamit Gül and doubled the imposition of tariffs on imported steel and aluminum.

 

On Sep 13, the Central Bank of Turkey hiked its main interest rate to 24%, a hike of 6.25% from the previous 17.75%. This was the biggest rate hike in President Erdogan’s 15-year rule (read: Top and Flop ETFs of September).

 

On Oct 9, Albayrak issued a new set of measures to fight inflation and urged the support of the private sector. The country’s private sector has agreed to charge at least 10% lower prices on its goods.  The new program also included a freeze on energy prices until the year-end and an acceleration of VAT rebates. Banks would be providing 10% discount on high interest loans taken after Aug 1. 

 

Finance Minister Berat Albayrak said on Oct 15 that the rate of inflation is expected to come down for the rest of the year. The inflation hit a 15-year high in September. He sounded very optimistic with combating measures adopted by the government will drive the country out of the burdens of higher inflation and interest rates. 

 

Turkey also intends to cut is dependence on imports. “We will offer up to 14 percent financing support to companies for their [Turkish] lira-based loans,” said Industry Minister Mustafa Varank. He also added that new Libor-based incentive of $200,000 was in consideration for the smaller and medium sized enterprises having export plans.

 

TUR could expect some more pricing action in the coming days psot these latest developments. Below we focus on this ETF: 

 

ETF in Focus

 

TUR 

 

It tracks the MSCI Turkey Investable Market Index. There are 62 holdings in the fund pool. AUM is $475.7 million and the expense ratio is 0.62%. The fund is highly liquid having a daily average traded volume of 983,000 shares. It has gained 7.4% over the past week. 

 

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