Page 23 - bne Magazine August 2022

bne August 2022 Companies & Markets I 23
The pressure gauges on Turkey's economy threaten to blow.
Fitch expects Turkey’s overall policy mix to remain overly accommodative at least until the 2023 elections that must take place by June at the latest.
There is a risk that in the event of weaker depositor confidence or a deterioration in the until-now resilient access of banks and corporates to external financing, official international reserves would come under pressure, as a significant portion of banks' foreign currency assets is held in the central bank, according to Fitch.
bne:Tech
Earlier this week, Fitch Ratings said in a report that Turkish insurers are facing one of their most challenging operating environments of the past decade with earnings and capital adequacy likely to come under severe strain in 2022-2023.
The effects of macroeconomic deterioration, soaring inflation and the continuing price cap on motor third-party liability (MTPL) insurance could push some insurers below minimum regulatory solvency levels, forcing them to raise capital or to be acquired by stronger competitors.
Turkish CPI inflation rose to over 70% in May and Fitch forecast that it would remain very high (end-2022: 60%, end-2023: 55%).
Sustained inflation at such high levels will have significant negative implications for insurers, pushing up the cost of claims and potentially leading to reserve shortfalls on longer- tail business lines.
It will also erode customers’ disposable income, weakening their ability to buy insurance.
VK set to become Russia’s tech leader as IT crisis shakes up sector
bne IntelliNews
Vladimir Kiriyenko, the new CEO of internet major VKontakte, enjoyed a day in the limelight at the St Petersburg International Economic Forum in June (SPIEF). “We have exceeded a monthly audience of 100mn and a daily audience of 50mn,” he told a room full of executives and officials. “For us, that’s a big achievement, the group has been working towards it for a long time,” he added.
Before Kiriyenko joined, Vkontakte (more commonly known as VK) had been stagnating in comparison with its international peers. Revenue growth had been falling steeply since the end of 2020, and the company had a net debt to EBITDA ratio of around 2.5 going into 2022.
When Russia sent troops into Ukraine in February, however, VK’s fortunes changed. Sanctions on Russian tech companies saw some of the competition drop away, driving their users into VK’s open arms. Bans on some foreign social media
platforms also helped VK. A host of new opportunities presented themselves – like acquiring assets being ditched by struggling rivals for knockdown prices and riding a wave of support from a government embroiled in an information war.
Now, VKontakte is consolidating its position in the Russian market, even as its competitors suffer from a dramatic tech crisis which has seen industry professionals flee en masse and foreign investors ditch positions in Russian companies.
Old news
The change of shareholders in December 2021 and the arrival of Kiriyenko was meant to represent a new course. East-West Digital News reports that business motives were a consideration in the restructuring, including helping the company to avoid potential US sanctions. But it was clear that the main message behind the restructuring was a political one: Kiriyenko’s father is President Putin’s first deputy chief of staff, and The Bell
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