Turkey's MSCI Emerging Markets Weight Declines Amid Currency and Valuation Pressures

【Turkey's MSCI Emerging Markets Weight Declines Amid Currency and Valuation Pressures】

⑴ Turkey's weight in the emerging markets index was once around 1.5% to 2%.

⑵ It declined steadily from 2016 to 2021, then recovered somewhat through 2024, before falling to approximately 0.4%.

⑶ There are multiple reasons, but fundamentally including the weakening of the lira.

⑷ Valuations have been revised downward, with the price-to-earnings ratio dropping from 10-12 times to 4-6 times.

⑸ The strength of the emerging markets technology sector has also reduced the relative weight of other markets.

⑹ Going forward, attention should be paid to the lira's trajectory, valuation recovery, and how structural shifts within the emerging markets index further impact Turkey's weight.