Page 3 - bne IntelliNews Turkey Outlook 2024

Executive Summary
Turkish lira papers are expected to prove the bet of the year in 2024. Following the local elections that will be held on March 31, Turkey’s policy rate will reach its peak. The finance industry will then be welcomed in for the rate-cutting feast. Double returns from the rising prices of lira papers and lira appreciation will be written.
When the USD/TRY stops heading north, the carry trade will also be on the table. With the non-capital controls on the lira market easing, the forex trade option will also return.
Eurobonds sold by Turkey’s government and big corporates always offer good returns. They currently stand in the 7-9% range, for long-termers.
The prices are at their peak at the moment as Turkey’s five-year credit default swaps (CDS) fell below the 300-level during the new year rally on global markets.
The course of the CDS does not indicate there is much space left in the downward direction. For trade purposes, a jump in the CDS during the next market stress (possibly up to the end of February on global markets or prior to the local elections in Turkey) could be followed up.
Borsa Istanbul is in a perfect mess. Lately, sharp sell-offs brought prices to more favourable levels. When the lira starts appreciating, currency gains will be added.
Local investors, who currently dominate the market, have been turning to deposits as lira deposit rates have surpassed the 50%-level.
When the lira stops depreciating, it could be seen as a sign of the beginning of the market entry of foreigners. By then the locals will also have sold what they are still up to selling.
All in all, the end of the lira’s appetite for depreciation will be closely observed. It may be on the table following the March 31 election date or even earlier. It will depend on the finance industry’s direct arrangements with the Erdogan regime.
Those who are interested in Turkish trade should closely track the USD/TRY in the coming period.
In May official inflation will peak. Inflation will then fall below the policy rate in the next few months thanks to the base effect. So the beginning of lira appreciation will arrive in July at the latest.
3 Turkey Outlook 2024 www.intellinews.com