iShares Turkey ETF (TUR) is thriving as lira (TRY) plunges

Turkish stocks are beating Wall Street in 2024 even as the lira sits at a record low. The iShares MSCI Turkey ETF (TUR) has jumped by almost 30% this year while the S&P 500 and Nasdaq 100 indices have soared by less than 50%.

Turkish stocks are soaring

Turkish equities have done well even as the central bank has hiked interest rates sharply this year in a bid to lower inflation. It has pushed the benchmark to 50% as inflation has continued rising and now sits at over 74%.

In most cases, stocks tend to underperform in a period when interest rates are rising. In Turkey’s case, investing in the country’s short-term government bonds is still generating a higher return than stocks.

The TUR ETF’s performance mirrors that of other Turkish indices. As I wrote last year, the BIST 100 index which tracks the biggest 100 companies in the country, has jumped to a record high. In the past five years, it has moved from a low of TRY 967 to over TRY 10,470 today, making it one of the best-performing indices in the world.

Most Turkish stocks have done well this year as the weaker lira has made their products attractive to foreign buyers. TAV Havalimanlari, Akfen Enerji, Turk Telekom, and Turkiyer Sigorta are the best-performing companies in the TUR ETF this year as they soared by over 99%.

TAV Havalimanlari, a leading Turkish airport operator, has led gains as demand for the country’s tourist sector continues to boom. 

The TUR ETF is one of the best ways for Americans to invest in Turkish stocks. Over the years, its total assets have surged to over $259 million. This fund tracks 98 of the biggest Turkish companies, most of which are in the industrials, financials, consumer staples, and materials segment. 

TUR ETF technical analysis

TUR chart by TradingView

The TUR ETF peaked at almost $44 earlier this year and then pulled back to $40 as some investors booked profits. This pullback was important as the fund bottomed at the 23.6% Fibonacci Retracement point. It was also along the 50-day Exponential Moving Average (EMA).

Now, the fund has remained above the Ichimoku cloud indicator while the Relative Strength Index (RSI) has pointed upwards. Therefore, the likely scenario is that the fund continues rising as buyers target the YTD high of $44. This price action implies a 6.50% increase from the current level.