{"id":105408,"date":"2021-01-25T09:44:22","date_gmt":"2021-01-25T09:44:22","guid":{"rendered":"https:\/\/fin2me.com\/?p=105408"},"modified":"2021-01-25T09:44:22","modified_gmt":"2021-01-25T09:44:22","slug":"analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/","title":{"rendered":"Analysis: Foreigners suspend disbelief, edge back into Turkish markets"},"content":{"rendered":"

ANKARA\/NEW YORK (Reuters) – Foreign investors who for years saw Turkey as a lost cause of economic mismanagement are edging back in, drawn by the promise of some of the biggest returns in emerging markets if President Tayyip Erdogan stays true to a pledge of reforms.<\/p>

FILE PHOTO: A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 2, 2018. REUTERS\/Murad Sezer<\/figcaption>

More than $15 billion has streamed into Turkish assets since November when Erdogan – long sceptical of orthodox policymaking and quick to scapegoat outsiders – abruptly promised a new market-friendly era and installed a new central bank chief.<\/p>\n

Interviews with more than a dozen foreign money managers and Turkish bankers say those inflows could double by mid-year, especially if larger investment funds take longer-term positions, following on the heels of fleet-footed hedge funds.<\/p>\n

\u201cWe\u2019re very encouraged to see a different approach coming in,\u201d said Polina Kurdyavko, London-based head of emerging markets (EMs) at BlueBay Asset Management, which manages $67 billion.<\/p>\n

\u201cWe have added to our exposure and we plan to keep it that way as long as we continue to see the orthodox steps.\u201d<\/p>\n

Turkey\u2019s asset valuations and real rates are among the most attractive globally. It is also lifted by a wave of optimism over coronavirus vaccines and economic rebound that pushed EM inflows to their highest level since 2013 in the fourth quarter, according to the Institute of International Finance.<\/p>\n

But for Turkey, once a darling among EM investors, market scepticism runs deep.<\/p>\n

The lira has shed half its value since a currency crisis in mid-2018 set off a series of economic policies that shunned foreign investment, badly depleted the country\u2019s FX reserves and eroded the central bank\u2019s independence.<\/p>\n

The currency touched a record low in early November a day before Nagi Agbal took the bank\u2019s reins. The question is whether he can keep his job and patiently battle against near 15% inflation despite Erdogan\u2019s repeated criticism of high rates.<\/p>\n

Agbal has already hiked interest rates to 17% from 10.25% and promised even tighter policy if needed.<\/p>\n

After all but abandoning Turkish assets in recent years, some foreign investors are giving the hawkish monetary stance and other recent regulatory tweaks the benefit of the doubt.<\/p>\n

Foreign bond ownership has rebounded in recent months above 5%, from 3.5%, though it is well off the 20% of four years ago and remains one of the smallest foreign footprints of any EM.<\/p>\n

For a graphic on Foreigners give Turkish bonds another look:<\/p>\n<\/p>\n

ERDOGAN SCEPTICS<\/h2>\n

Six Turkish bankers told Reuters they expect foreigners to hold 10% of the debt by mid-year on between $7 to 15 billion of inflows. Deutsche Bank sees about $10 billion arriving.<\/p>\n

Some long-term investors \u201care cozying up to the idea of being long Turkey but it\u2019s a long process,\u201d said one banker, requesting anonymity.<\/p>\n

Paris-based Carmignac, which manages $45 billion in assets, may take the plunge after a year away.<\/p>\n

\u201cThere could be some value in Turkish assets and we have started to look with a little bit more interest especially with the very high rates,\u201d said Joseph Mouawad, emerging debt fund manager at the firm.<\/p>\n

\u201cIt is still a hairy market to invest in but for sure, relative to what has been happening in the last 18 months, things have dramatically shifted and … that has a lot to do with the people running the economic policy,\u201d he said.<\/p>\n

Turkish stocks have rallied 33% to records since the shock November leadership overhaul that also saw Erdogan\u2019s son-in-law Berat Albayrak resign as finance minister.<\/p>\n

He oversaw a policy of lira interventions that cut the central bank\u2019s net FX reserves by two thirds in a year, leaving Turkey desperate for foreign funding and teeing up Erdogan\u2019s policy reversal.<\/p>\n

In another bullish signal, Agbal\u2019s monetary tightening has lifted Turkey\u2019s real rate from deep in negative territory to 2.4%, compared to an EM average of 0.5%.<\/p>\n

But a day after the central bank promised high rates for an \u201cextended period,\u201d Erdogan told a forum on Friday he is \u201cabsolutely against\u201d them.<\/p>\n

The president fired the last two bank chiefs over policy disagreement and often repeats the unorthodox view that high rates cause inflation.<\/p>\n

\u201cInvestors didn\u2019t expect the leopard to have changed his spots and he hasn\u2019t. I suspect people will be feeling Erdogan\u2019s influence by mid-2021\u201d when rates will be cut too soon, said Charles Robertson, London-based global chief economist at Renaissance Capital.<\/p>\n

Turks are among the most sceptical of Erdogan\u2019s economic reform promises. Stung by years of double-digit food inflation, eroded wealth and a boom-bust economy, they have bought up a record $235 billion in hard currencies.<\/p>\n

Many investors say only a reversal in this dollarisation will rehabilitate the reputation of Turkey, whose weight has dipped to below 1% in the popular MSCI EM index.<\/p>\n

\u201cTurkey can\u2019t be a long-term investment for portfolio investors because they will expect the rinse-and-repeat process … that we\u2019ve seen so many times in the last 15 to 20 years,\u201d Renaissance\u2019s Robertson said.<\/p>\n

For a graphic on Turks\u2019 record holdings of hard currencies:<\/p>\n<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

ANKARA\/NEW YORK (Reuters) – Foreign investors who for years saw Turkey as a lost cause of economic mismanagement are edging back in, drawn by the […]<\/p>\n","protected":false},"author":3,"featured_media":105407,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nAnalysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Analysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me\" \/>\n<meta property=\"og:description\" content=\"ANKARA\/NEW YORK (Reuters) – Foreign investors who for years saw Turkey as a lost cause of economic mismanagement are edging back in, drawn by the [...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/\" \/>\n<meta property=\"og:site_name\" content=\"Fin2me\" \/>\n<meta property=\"article:published_time\" content=\"2021-01-25T09:44:22+00:00\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/fin2me.com\/wp-content\/uploads\/2021\/01\/cnewsfotor2-7.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/\",\"url\":\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/\",\"name\":\"Analysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me\",\"isPartOf\":{\"@id\":\"https:\/\/fin2me.com\/#website\"},\"datePublished\":\"2021-01-25T09:44:22+00:00\",\"dateModified\":\"2021-01-25T09:44:22+00:00\",\"author\":{\"@id\":\"https:\/\/fin2me.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\"},\"breadcrumb\":{\"@id\":\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/fin2me.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Markets\",\"item\":\"https:\/\/fin2me.com\/category\/markets\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Analysis: Foreigners suspend disbelief, edge back into Turkish markets\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/fin2me.com\/#website\",\"url\":\"https:\/\/fin2me.com\/\",\"name\":\"Fin2me\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/fin2me.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/fin2me.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\",\"name\":\"Mark\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/fin2me.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/39b72719fb75a2d3c7d7695026648602?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/39b72719fb75a2d3c7d7695026648602?s=96&d=mm&r=g\",\"caption\":\"Mark\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Analysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/","og_locale":"en_US","og_type":"article","og_title":"Analysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me","og_description":"ANKARA\/NEW YORK (Reuters) – Foreign investors who for years saw Turkey as a lost cause of economic mismanagement are edging back in, drawn by the [...]","og_url":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/","og_site_name":"Fin2me","article_published_time":"2021-01-25T09:44:22+00:00","author":"Mark","twitter_card":"summary_large_image","twitter_image":"https:\/\/fin2me.com\/wp-content\/uploads\/2021\/01\/cnewsfotor2-7.jpg","twitter_misc":{"Written by":"Mark","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/","url":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/","name":"Analysis: Foreigners suspend disbelief, edge back into Turkish markets - Fin2me","isPartOf":{"@id":"https:\/\/fin2me.com\/#website"},"datePublished":"2021-01-25T09:44:22+00:00","dateModified":"2021-01-25T09:44:22+00:00","author":{"@id":"https:\/\/fin2me.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a"},"breadcrumb":{"@id":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/fin2me.com\/markets\/analysis-foreigners-suspend-disbelief-edge-back-into-turkish-markets\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/fin2me.com\/"},{"@type":"ListItem","position":2,"name":"Markets","item":"https:\/\/fin2me.com\/category\/markets\/"},{"@type":"ListItem","position":3,"name":"Analysis: Foreigners suspend disbelief, edge back into Turkish markets"}]},{"@type":"WebSite","@id":"https:\/\/fin2me.com\/#website","url":"https:\/\/fin2me.com\/","name":"Fin2me","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/fin2me.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/fin2me.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a","name":"Mark","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/fin2me.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/39b72719fb75a2d3c7d7695026648602?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/39b72719fb75a2d3c7d7695026648602?s=96&d=mm&r=g","caption":"Mark"}}]}},"_links":{"self":[{"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/posts\/105408"}],"collection":[{"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/comments?post=105408"}],"version-history":[{"count":0,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/posts\/105408\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/media\/105407"}],"wp:attachment":[{"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/media?parent=105408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/categories?post=105408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fin2me.com\/wp-json\/wp\/v2\/tags?post=105408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}