Top Performing ETFs: Turkey and Taiwan

In absolute terms, the Turkish and Taiwanese stock markets posted the best results in the first half of 2024. However, the more than 9% decline of the Turkish lira against the euro, amidst rampant inflation, diminishes the impact of this progress.

Turkey's Economic Growth Overshadowed by Extremely High Inflation Levels

Turkey's economic landscape has been witnessing substantial growth, driven by strong domestic demand. According to TurkStat, the country's Gross Domestic Product (GDP) grew by 5.7% year-on-year (YoY) in the first quarter of 2024. This growth outpaced many emerging markets, showcasing the apparent resilience of the Turkish economy, despite a slowdown in main trading partners and devastating earthquakes in February.

In addition to soaring GDP, Turkey's unemployment rate has seen a significant reduction. Seasonally adjusted metrics indicate that unemployment dipped to 8.7% during the first quarter of 2024, the lowest recorded figure in the last forty-four quarters.

Strategic policies enacted by the Turkish government aim to render Turkey an attractive investment hub, particularly in the form of ETFs that have exhibited double-digit performances in the first half of 2024. That said, these seemingly spectacular figures must be put into perspective with the rampant inflation, around 71% in June (CPI Y-on-Y). The central bank's aggressive monetary tightening in the face of soaring inflation will eventually weigh on economic growth. It should be kept in mind that the central bank raised interest rates by 500 basis points in March, bringing them to the astronomical level of 50% to combat inflation. As a result, growth is expected to slow during the rest of the year.

Here's a comparison between top Turkey ETFs

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Taiwan: Second Best performer of 2024

Taiwan's stock market soared in the first half of this year, fueled by the strong performance of its leading electronics sector. The key indicator, the Taiwan Weighted Index, surged nearly 32% thanks in large part to chipmaking giant TSMC. As the heaviest weighted stock, TSMC itself saw a remarkable 68.33% gain. This impressive growth reflects both TSMC's solid fundamentals and investor optimism about upcoming interest rate cuts from the US Federal Reserve.

Taiwan's economic strength is deeply tied to its dominance in semiconductor manufacturing. The island nation boasts over 60% of global semiconductor production and a staggering 90% share of the most advanced chips. This sector has witnessed explosive growth in recent years, driven by the rise of artificial intelligence. With its leading edge in chip production, Taiwan has become a major player on the world stage.

The island's prowess in semiconductors has significantly impacted investment trends. As investors recognize the sustained demand and future growth potential of the industry, they are increasingly turning their attention to Taiwanese exchange-traded funds (ETFs).

Here's a comparison between top Taiwan ETFs

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.