Page 4 - TURKRptJul20
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1.0 Executive summary
Systematic manipulation has globally reached unprecedented levels in giving the post-truth era its due, and Erdogan’s Turkey stays out ahead of Donald Trump’s America. From the humblest speculator to the US president, are sending the Titanic, that is to say planet Earth, full steam ahead as the water gushes in. Coronavirus has put a deeper gash in the hull than was expected from the accumulation of insidious economic imbalances alone and the sons of Adam have found their wise solution in stepping harder on the gas.
Erdogan is upgrading his faschism. Everywhere opinion poll results are circulating again, suggesting that the number of votes that would go to Erdogan or to his “spare tyre”, ultra-nationalist MHP leader Devlet Bahceli, are far short of what would secure a coalition victory in the next elections. But by now, whether any elections will be held is questionable.
Forex held by Turks, a confidence indicator, climbed to a new record high (See Section 8.1.3). While unions in Turkey have been claiming that the country’s real unemployment rate is approaching 40%, Erdogan has been increasing his involvement in the Libyan and Syrian conflicts and conducting some offensives against Kurdistan Workers’ Party, or PKK, hideouts in Iraq.
Libya is the new Syria but it is far away from Turkey and there are no free markets anymore that could seek some volatility over war-gaming ugliness.
Is it just good for boosting the magnitude of the synthetically delayed strongest crash?: “Emerging markets enjoyed their strongest crisis bounceback ever.”
Turkey is “seeking a better trade balance with China” .
Turkey’s public finances are no longer “a pillar of strength” as an underappreciated risk is the build-up of contingent liabilities faced by the government. Turkey’s policy makers are “pumping money into the economy at the fastest rate since at least 2007”. The money supply, as measured by the M1 gauge—which includes currency in circulation and bank deposits—is growing at an annual rate of almost 80%. The central bank’s securities portfolio jumped to Turkish lira (TRY) 76bn ($11.2bn) as of June 8 from TRY24bn as of March 31 while it is expected to buy more paper.
Erdogan raised withholding tax on FX funds’ transactions to 15% from 10% and banned new FX fund establishments. At roughly $3bn, the size of the funds affected by the measures is relatively small, especially when compared to the $195.7bn of hard-currency deposits held by households and businesses, “but moving to restrict this corner of the market shows authorities are determined to limit the persistent demand for foreign exchange”.
Electricity consumption, an indicator to track the industrial activity, collapsed 17% in May but demand in June was up 1% y/y by June 17. A surge in power demand was seen especially in the week between June 15 and 20.
Turkey's sovereign wealth fund acquired Sweedish Telia’s Turkcell stake (See Section 5.3) and it also purchased precious metals mines (See Section 6.1.3). The fund reportedly plans its first eurobond sale (See Section 8.5.1).
Turkish IT firms are sold like hot cakes. Zynga Inc bought Turkish mobile game maker Peak for $1.8bn in what’s being seen as Turkey’s first technology “unicorn exit”. UAE fintech firm TPAY Mobile acquired Turkish mobile payment platform Payguru. Belgium-based team.blue acquired Turkish hosting provider Natro.
4 TURKEY Country Report July 2020 www.intellinews.com
