At Emerging Money we have written significantly on Turkey and
discussed the challenges of their macro struggles. In
short, we have guided investors towards a view that Turkey
is not broken but will be noisy on politics and that the
investment time horizon will be over the next 12 months, not 12
Today's news flow is a case in point: Tensions escalated today in
Istanbul as recorded conversations between PM Erdogan and his son
implicating fraud were posted on the internet.
The PM's spokesman has said the voices on the tapes were fake
and that perps would be brought to justice, but can we really
know where this is leading?
Erdogan's increasingly autocratic rule and intolerance of any
opposition is wearing thin for locals and thus wearing thin for
the market as there is a call for the government to resign.
With all that has transpired in Ukraine, it's not a surprise
to see Turkey (
) trade off more than 3.3% today.
Watch the currency which is off -1.5% over two days after
being "rock steady" for the previous few weeks.
In my view, a move to 2.23 is a move to 2.30.
March 30 elections will mean there is fear and noise and
potentially a volatile political transition.
The elections later in the year should give a green light to
Turkey's superior corporate stories.
Turkish banks are some of the best run institutions in the
world and trade at valuations that will reward longer term
commitment, or pick your spots after the politics calm down.