The ancient city of Istanbul is one of my favorite places in the world. The beauty, commerce and dining opportunities of this famous port city are unmatched. Considered a central hub between the Eastern and the Western economies, Istanbul thrives on diversity and a booming free-market business climate.
Istanbul truly brings the world's best together in one melting pot for the benefit of businessmen, investors and travelers worldwide. Not only is the city a beautiful travel destination, but its thriving business has turned Turkey into one of the most important economies in the so-called Eurasia region.
Turkey is part of the European Union -- though not part of its unified monetary system -- but has been able to remain untouched by the debt crisis and economic collapse in the region. And because the country's currency, the lira, remained strong despite a plummeting euro, Turkey has gotten a distinct international trade advantage over its neighboring nations.
I'm clearly excited about Turkey's economic boom and its investment opportunities. After a little research, I discovered an easy and effective way for investors like you and me to get a piece of Turkey's economic success.
What I found is one of 2012's hottest exchange-traded funds (ETFs), the iShares MSCI Turkey Investable Markets Index ETF (NYSE: TUR), which has almost $600 million in assets. As you can imagine, following the call of upside potential, investors have been scooping up this ETF. In March, TUR had more than $430 million in assets. By the end of October, this number had grown 40%. The ETF's portfolio holds 97 companies in the communication services, basic materials, consumer defensive, industrials and financials sectors.
Although the fund is higher by more than 40% this year, trading at about $61 a share, it's still well off its 2010 highs of $75.47. This bodes well for further potential upside, not to mention the fact that the Turkish government is taking steps to stimulate the economy further. In fact, it recently lowered interest rates for the second month in a row to 9.5%. Just imagine the economic growth stimulated should the easing continue.
Technically speaking TUR has been in a strong uptrend since June 1, using the 50-day simple moving average for support. Price just broke out above $61 on its way to my target price of $76 within the next 12 months. In this situation, I like buying momentum. Therefore, buying on the current breakout is the perfect technical time to jump on this train.
Risks to Consider: TUR is overweight in finance. Provided the weak state of the eurozone's banking system, compared with the relative strength of Turkey's, overweighting is presently a good thing. But as the eurozone banking system slowly strengthens, Turkey's financial sector will look less appealing. Despite the growth, Turkey's economy is slowing triggering the interest rates cut to keep the nation competitive. The explosive growth will eventually end, however, no one knows when for certain. As always, remember to use stops, position size correctly and diversify.
Action to Take --> Buying this ETF now with stops at $58 and a one-year target of $77 makes perfect sense.