Long considered “univestable” because of Erdogan’s silly economic policies, Turkey suddenly began attracting interest and investment from Emerging Markets (EM) fund managers.
As President Erdogan sticks with economy czar Mehmet Simsek despite growing pressure from his rank and file and the public at large, confidence in Turkey grows. Simsek has been tasked with reducing Turkey’s rampant inflation and external deficits, which were a time bomb.
Come July 2024, the signature achievement of Mehmet Simsek has been to shrink external deficits, which has led to a strong Turkish Lira. As time passes, he is making believers out of more and more fund managers and global creditors at large that Turkey will change “her errand ways”. Turkey’s attractiveness –for the time being—is compounded by expectations of Fed rate cuts and a weaker US dollar, which are always good for EM.
But, there are other reasons why fund managers may buy more Turkish financial assets, as this video discusses. Needless to say, any investment view entails risks. At this juncture these are manageable for Turkey, but what about 2025?
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