This Week's Winning Country: Turkey

It’s been a rough time for country funds (and many other types of funds).

Rolling up the world, including the US, other developed markets and the emerging markets (VT), the past week saw a negative 0.58% return.

On a 3-year basis, all of the countries with investable funds available in the US had positive annualized returns.

On a 12-month basis only four countries had funds with positive returns: 

Brazil (EWZ)

Russia (RSX)

Canada (EWC)

China (FXI)

On a YTD basis, no country had a representative fund with a positive return.

On a 3-month basis, only Turkey (TUR) had a positive return, and that is due primarily to the action in this last week (discussed below)

On a 1-week basis, ten countries had a positive return:

Turkey (TUR) and (TKF)

Israel (ISL)

South Africa (EZA)

Indonesia (IF)

Malaysia (EWM)

Chile (ECH)

Mexico (EWW)

United States (VTI)

India (INP)

Russia (RSX) — but only so slightly at 0.02%

In opposite direction for the week, six country funds saw declines of over 3%: 

Australia (EWA)

Taiwan (EWT)

South Korea (EWY)

Italy (EWI)

Belgium (EWK)

GCC countries - heavily U.A.E. (TRAMX) 

The image below lists all of the country funds we followed for this report (click image to enlarge).

TURKEY:

Turkey was this week’s big winner by far and away  The catalyst was the decision by the Constitutional Court in Turkey against banning the ruling AKP party as requested by secular interests in the country.

That decision prevented (or at least deferred) the domestic political chaos or worse, that might have occurred.  It also probably averted Turkey-EU relations problems that might have occurred, if the AKP had been banned.  The court decision thereby reduced the apparent investment risk for direct and indirect investment, pushing stock prices higher.

Whether related tensions will arise again, we have no idea, but it does appear that the court decision was the catalyst for the recent rise in Turkish shares.

Investments in Turkey have historically been volatile, as the long-term chart (logarithmic prices) shows:

The next chart shows the MSCI Turkey index versus the Morgan Stanley Turkey Fund (TKF) and the Barclay’s Turkey ETF (TUR).

Turkey is definitely this past week’s big winner, and may have been for the past month.

Disclosure: Author does not have a position in either of the Turkey funds mentioned.