JPMorgan Downgrades MSCI Türkiye Outlook to ‘Neutral’ Amid Currency and Inflation Concerns

In a recent shift of sentiment, JPMorgan, one of the leading investment banks in the U.S., downgraded its investment recommendation for the MSCI Türkiye Index from “overweight” to “neutral.” The decision, outlined in the bank’s latest market report, was driven by an upward revision in Türkiye’s inflation forecasts and the postponement of expected interest rate cuts.

TL Volatility Emerges as Key Risk for Turkish Stocks

While JPMorgan acknowledged the appealing valuation levels and low foreign investor participation as potential drivers for equity gains in the medium term, the bank emphasized that sharp depreciation in the Turkish lira (TL) poses a significant short-term risk for financial markets.

“The Turkish lira’s rapid decline could disrupt near-term equity performance despite long-term upside potential,” the report stated.

Rising China Competition Could Pressure Turkish Manufacturing

The bank also warned of a new external challenge: China’s shifting trade strategy. As the U.S. increases tariffs on Chinese goods, China may redirect its export focus toward Europe and the EMEA (Europe, Middle East, and Africa) regions.

This shift, JPMorgan cautioned, could intensify competition for Türkiye’s medium-tech manufacturing sector, placing local exporters under pressure.

“China’s trade pivot could squeeze Türkiye’s manufacturing competitiveness across key markets,” analysts noted.

This reevaluation reflects growing market caution as monetary easing expectations in Türkiye fade, and global trade dynamics evolve, creating new competitive threats.