Moody’s moves Turkey to investment grade as HL suggests funds for exposure to the market

17th May 2013

Turkey’s debt has been upgraded to investment grade by ratings agency Moody’s marking the significant progress of this emerging market in marked contrast to the peripheral countries of the eurozone.

The agency upgraded Turkey to Investment Grade status (Baa3). It the second of the three big ratings agencies to upgrade Turkey to Investment Grade status following Fitch in November 2012. Standard and Poor’s classification is BB+ remains one below Investment Grade.

Broker Hargreaves Lansdown’s Adam Laird, Passive Investment Manager, says: “Turkey is an interesting country for investors- its fast growth has earned it the nickname “New Tiger”. It is a vast country rich in resources that is rapidly making its way onto the global market. Turkey is an enterprising country with a strong industrial centre in the Anatolian region. In particular, the country has strong trade links with growing markets in the Middle East and Russia.

“Investing in Turkey is a specialist investment strategy and not without risks- this is an emerging country with currency risk and the country underperformed Emerging Market peers in 2011. But investors who have ventured here have been rewarded – investors have seen profits of 110% in the last 5 years (compared to 45% for the FTSE All Share) and 19.59% so far in 2013 (compared to 11.66% for the FTSE All Share). It can be difficult to access through traditional funds though some European Trackers have a small weighting- the Legal and General European Index Trust holds 1.58% in Turkey. There are Exchange Traded Funds (ETFs) which are specifically focused on the Turkish market, like HSBC MSCI Turkey ETF (HTRY) which is a physically replicated fund holding 25 of the largest Turkish companies.”

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