Page 11 - TURKRptDec20
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Iran sanctions. 4-) The virus
The coronavirus situation in Turkey and in Europe is starting to produce some chilling statistics but it seems historians looking for signature events of our times will be looking back trying to reconcile rallying markets with soaring death rates.
5-) Erdogan plans to keep pumping lira into the domestic market and that in turn will keep domestic FX and gold demand alive.
The balance between domestic demand and portfolio inflows accompanied by such moves as ending the central bank’s gold purchases makes for a delicate path, just like the attempts at absorbing rising lira liquidity in London by increasing local banks’ USD available in exchange for TRY.
6-) Domestic political stress is curbed as the US establishment is showing signs to take Erdogan back under its wing. There is nothing as yet to suggest Biden will not agree compromises acceptable to Ankara.
7-) Turkey is nothing if not capable of throwing up surprises out of thin air.
Locals not satisfied with Turkish lira (TRY) deposit rates remained in a wait-and-see mood while the big action on Turkey’s asset markets derived from foreign investors’ activity.
Turkey attracted a net $572mn of portfolio inflows in the week ending November 20 after registering $928mn in the previous week—the first week of the “market-friendly” policy switch announced by the Erdogan administration as the country slipped towards a full-blown balance of payments crisis.
Also in the week ending November 20, the Turkish banking industry’s off-balance sheet FX surplus increased by $3.4bn w/w.
Given that the central bank’s net international reserves simultaneously rose by $2bn, Turkey may have attracted at least $1.4bn in portfolio inflows via the swap market even if the entirety of the increase in the central bank’s international reserves came from rising swap stock with local banks, @VeFinans wrote on Twitter.
Turks’ FX deposits, meanwhile, increased further by $2.4bn w/w to a fresh record of $228.2bn as of November 20.
The FX deposits are just bank records and they act to absorb real FX demand. However, the picture shows that Turks do not believe in the recovery.
In the week ending November 13, Turkey was estimated to have attracted around $5bn of portfolio inflows, including $928mn that went into Borsa Istanbul, domestic government bonds and domestic corporate bonds, plus about $4bn via swaps.
Although the increase in the foreign investor share in Turkish stocks further slowed, interest from foreign players in lender Garanti BBVA (GARAN) and airports operator Tav (TAVHL) continued through this week, Is Invest’s daily foreign share bulletin showed on November 26.
On November 13, London-listed asset manager Ninety One said in a filing with Borsa Istanbul that it increased its stake in airport operator Tav (TAVHL) to 10%.
On November 19, it said it increased its stake in retailer Migros (MGROS) to
11 TURKEY Country Report December 2020 www.intellinews.com
