Turkish Failed Coup and Investment Environment
The failed coup was over before it really started. It looked like a desperate attempt to overthrow the current AKP government.
Unlike coups of the past in Turkey, this one did not have the support of the electorate. Firstly, about 50% of the Turkish population supports the AKP party. And most of the remaining voters do not want to see a return to military rule. This would have been negative overall for Turkey.
I will not go into a detailed discussion on the politics here since it is currently a very fluid situation and I believe our readership would benefit from our views on any investment opportunities for the moment.
Short-term, there are some opportunities. The currency has already rebounded but the stock market was still down as of Monday morning. If you want to take a position, the broad market ETF – TUR, is probably the best bet.
Please note that risks still remain in that the tourism sector was down recently due to the terrorist attacks and Turkey is at risk of a US interest rate rise probably sometime after the November elections in the US.
Thus I would say a short to medium term trade in TUR for up to 3 months might yield positive return. Maybe somewhere around 5 to 10% gain. On our portfolio, we are not investing since the options for the ETF are not liquid enough and we think the gain is barely sufficient for the risk taken here.
A lot depends on the reaction of the current government against the coup plotters and the upholding of the legal process. This is critical for investor confidence.