Emerging Market Surprise: Turkey Upgraded by S&P (TUR, TKF, TKC)

If you have read the news about Greece, Spain, and other PIIGS nations, you might think that the EuroZone and any neighboring states would be in the tank.  If you asked about Turkey without making any quick research you might just lump it into the same pile.  Well, Standard & Poor’s says differently.  S&P has actually raised Turkey’s credit ratings today.

Turkey is still not the easiest country to invest in from ETFs, closed-end funds, and ADRs.  But there is one of each that investors here in the U.S. can use.  There is the iShares MSCI Turkey Invest Market Index (NYSE: TUR), the Turkish Investment Fund Inc. (NYSE: TKF), and Turkcell Iletisim Hizmetleri AS (NYSE: TKC).

S&P has noted several positive issues in Turkey, and surprisingly talked up its banking system.  Noted was that Turkey has steadily reduced its debt burden in the last decade.

• Long-term foreign and local currency ratings to ‘BB’ and ‘BB+’;outlook is positive,  possibly generating  an additional upgrade in the next 12 to 24 months.
• The ‘B’ short-term ratings were affirmed and the outlook is positive.
• The Transfer and Convertibility Assessment was raised to ‘BBB-‘ from ‘BB+’.
• The ‘trAA+/trA-1’ Turkish national scale credit ratings were affirmed.

It is hard to not see a note about the “success of Turkey’s regulatory institutions in preserving the solidity of the financial sector…” S&P also called Turkey’s banking system one of the strongest and least-leveraged in Eastern Europe with a well capitalized banking system and a low leverage of the household sector.

iShares MSCI Turkey Invest Mkt Index (NYSE: TUR) is up 0.65% at $54.27 on almost 33,000 shares.  The 52-week range is $19.05 to $59.19 and average volume is 250,000.  Listed assets are $433 million.

Turkish Investment Fund Inc. (NYSE: TKF) is up 0.7% at $13.10 on only about 6,300 shares.   The 52-week range is $4.05 to $14.48 and average volume is 40,000 shares.  Listed market cap today is $98 million.

Turkcell Iletisim Hizmetleri AS (NYSE: TKC) is the longest standing ADR in the region, operating a large cellular network in the country.  The ADR is up 0.8% at $16.49 on 241,000 shares.  The 52-week range is $10.90 to $19.99 and average volume is almost 700,000 shares.  The market cap today is listed as roughly $14.5 billion.

JON C. OGG
FEBRUARY 19, 2010