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Weak Industrial Production Data – Turkish Lira Continues Its Slide

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Business sentiment in France

On March 9, the Bank of France released its survey results for the Business Sentiment Index for February. The Bank of France Business Sentiment Index continued to stagger below 100 for the 15th month in a row. The survey includes about 4,000 business managers in France. It was created to measure changes in business sentiment in France. It’s normalized around 100. This is its long-term average from 1981. It has a standard deviation of ten. A reading above 100 indicates positive business sentiment.

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For February, the index shed two index points from the 98 points recorded in January. It settled at 96 for February. France is also one of Russia’s trading partners. It’s witnessing a slowdown in its manufacturing sector activity. French companies like Alcatel-Lucent (ALU), Orange (ORAN), and Sanofi (SNY) have a presence in Russia.

The Bank of France lowered its estimate for GDP (gross domestic product) growth in the country for the first quarter from 0.4% to 0.3% quarter-over-quarter. Credit Suisse downgraded the country to “underweight.” It cited the country’s weak manufacturing momentum as one of the main reasons for the downgrade. The iShares MSCI France (EWQ) is down 1.3% over the past month.

Industrial production in Turkey

The day also saw the industrial production scorecard release for January in Turkey. In January 2015, Turkey recorded its biggest drop in industrial production in more than five years. From the +0.70% month-over-month change recorded in December 2014, industrial production was down to -1.4% in January 2015.

Compared to January 2014, industrial production in Turkey declined by -2.20% in January 2015. In January 2014, it had a 2.50% gain compared to January 2013. The biggest drop was recorded in the mining output. It fell by 11.5%. Manufacturing was next at -2.4%.

The decline in exports to Iraq and Russia hurt industrial production in Turkey. It was also impacted by the overall growth slowdown in the European continent. Since the beginning of the year, the iShares MSCI Turkey ETF (TUR) is down by about 19.17% as of March 10. The Turkish lira continues its slide against the US dollar. This is due to weak growth and Europe weakening.

In the next part of this series, we’ll discuss how conditions in Turkey versus Mexico create ground for a good value play.

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