FOREIGN INVESTORS RETURN TO BORSA ISTANBUL

The foreign investor share in BIST Exchange began to rise last week after dipping to historic lows. After making exists totalling $4.2 billion in the first five months of the year, foreign investors made net purchases of $50 million in the week that ended on June 12, according to the Central Bank. Experts believe this is a sign of the return of foreign investors, with the share of foreign investors on the exchange increasing to 52.17 percent on the last trading day of last week.

The consumer confidence index and industry, services, construction, and retail confidence indices jumped last week, in line with expectations. All these indices are important as they reflect the situation in June and the normalization period. We will see similar performances in other June indicators. Industrial production, retail sales, exports, and the current account balance will perform better than they did in April and May. However, the outlook of the upcoming months is what’s important.

The IMF’s (International Monetary Fund) Global Economic Outlook Report was one of the most important pieces of data from last week. The association made downward adjustments to the economic growth expectations of the U.S., Eurozone, and the global economy in 2020. The revised global economic growth estimate is now negative 4.9 percent compared to a contraction of three percent in the previous report. The growth estimate of the U.S. decreased to -8 percent from -5.9 percent, while the Eurozone’s economic growth expectation fell to -10 percent from -7.5 percent. However, the IMF didn’t change the 5 percent economic contraction estimate for Turkey. The real reason why Turkey’s economic growth estimate stayed unchanged despite downward revisions in exports and plummeting tourism revenues is the expectation of increasing domestic demand against the contraction in foreign demand. The fall in interest rates, increasing credit demand, abrupt recovery in consumer, and sectoral confidence indices and other measures signal that domestic demand will perform better than foreign demand in 2020.

Four important pieces of data will be announced this week. First, the economic confidence index consisting of the averages of the confidence indices announced last week; second, the June PMI index. After seeing 33.4 in April and 40.9 in May, the PMI may increase above 50 this month. Although it may vary in some sectors in terms of power and speed, a recovery in June seems highly possible. We will see this result on Wednesday morning.

The Ministry of Trade will announce the preliminary foreign trade data on Thursday. Exports will perform better compared to April and May, as the 9 days of Ramadan holiday, which was in June in 2019, was celebrated in May this year.