SHAFAQNA Türkiye – While Turkey is locked in elections on May 14, investors are trying to find their way amid the political uncertainty caused by the elections.
Trading volumes on Turkish stock markets have fallen by a third over the past two weeks. Bloomberg said uncertainty surrounding the May 14 election is holding investors back.
The analysis showed that this election was a vote in which Erdogan faced a united opposition seeking to resolve the government’s controversial fiscal and monetary policies.
ISTANBUL BORSA IS STRENGTHENING
While trading volume on the Borsa Istanbul exchange fell sharply in March, the BIST 100 index fell more than 8 percent in March. Thus, the index showed the worst quarterly performance since the start of the pandemic.
According to Tuna Çetinkaya, Deputy CEO of Info Yatırım Brokerage, investors are more cautious about making deals during times of uncertainty. Çetinkaya said: “Weak trading volumes increase further during panic selling.”
“INVESTOR LOOKED FOR AN OTC ALTERNATIVE”
Chetinkaya said that as the BIST 100 is trading below the psychological limit of 5,000, investors are increasingly turning to alternatives such as gold or foreign currencies.
Another analysis of Turkey by Bloomberg indicated that hedge fund companies that specialize in hedging are avoiding investments related to Turkey.
Mutual funds targeting emerging markets, including Turkey, said it was difficult to predict which scenario would play out from now on. It was also stated that regardless of the election results, the depreciation of the Turkish lira is expected in the next period.
“LIRA’S VALUE IS EXPECTED”
Ali Akay, chief investment officer at London-based investment firm Carrrhae Capital, commented: “There are no other investment opportunities in Turkey other than the impending devaluation of the Turkish lira.”
While Barclays PLC and TD Securities expect the Turkish lira to depreciate 40 percent to $27 in the third quarter, futures contracts also showed that investors expect the lira to depreciate no matter who wins.
“RISKS AROUND EXCHANGE INVESTORS”
“The risk is that you could face currency controls or a sudden devaluation,” said Kamil Dimmich of London-based emerging markets investment management firm North of South Capital. At the moment, we have not entered Turkey directly due to the risks associated with the exchange rate,” he said.
Rejat Suri, one of the partners of Helm Investment Trust, said that “more predictable policies could improve the investment environment and return foreign investment, albeit slowly.” However, while such a development is not far off, Suri stated that they are staying away from the Turkish market due to the political uncertainty and risks that await TL.
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