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Should You Buy The “TUR” ETF?

November 21, 2014
Is Turkey The RIght Place To Invest?

Three Factors To Consider Before Buying “TUR” ETF.

  1. Lower oil – If oil stays low, then Turkey should thrive. Turkey greatly depends on oil imports. In 2014 the price of oil fell and Turkey’s balance of payments looked better. Low oil prices bode well for the future growth of Turkey. Low cost energy means lower production costs and energy costs thus helping to fuel GDP growth in Turkey. This also improves the Turkish balance of payments so that the country’s balance sheet looks better.
  2. Dollar denominated debt – Turkey has lots of dollar denominated debt which is more vulnerable with the increasing strength of the U.S. dollar. As Janet Yellen and the U.S. Fed raise interest rates in 2015 the dollar could continue to strengthen. Ironically, oil is also denominated in dollars so a rising dollar means lower oil prices and vice versa.
  3. Turkey’s central bank - Turkey’s central bank has room to continue to ease interest rates through its monetary policy. These lower interest rates can help spur the economy forward. Some countries like Japan have such low rates that they have no juice left to push the economy higher. Turkey on the other hand has this monetary capacity which can bode well for stocks if the central bank continues to ease.

In one’s investment portfolio allocate no more than 5% of your portfolio to a single country. We did research and found that Fidelity offers 25 commission free trades for ETFS. A responsible investor would build a portfolio of various country ETFs that one would  think might have potential in the future. Some other ideas for interesting countries include Thailand, Korea, Peru, and Greece.  Any way we hope our research has been helpful to you and feel free to contact us with your thoughts or questions.

Pros and Cons of Investing In Turkey

November 20, 2014
Pros and Cons of Investing in Turkey ETF
  • ProsTurkey is well positioned between Europe and the Middle East for commerce and trade. Geographically, access to water gives Turkey special opportunity to conduct trade through shipping. Furthermore, the central bank has more cushion left with which to lower interest rates and effect monetary policy. The country has solid GDP growth.
  • Cons – Given that lots of the country’s debt is denominated in U.S. dollars and the dollar is strengthening, it may be harder for Turkey to pay off its debt. The interest payments need to be made in U.S. dollars. You see as the Turkish currency depreciates against the dollar then it becomes harder to make the payments.