CAN TURKEY RISE AGAIN AS AN INVESTMENT DESTINATION?

Since the beginning of the year, more than $8 billion have left Turkish markets. The exodus began before the pandemic outbreak but accelerated during the days of panic and uncertainty. In the early days of the outbreak, many blamed the panic on global markets. Central banks, led by the Fed and ECB, announced hefty relief packages that pumped liquidity into the markets to prevent a full-out crash. But emerging markets have seen investors syphon out around $90 billion.

Emerging market currencies all saw their values drop against the USD. Turkey, of course, was not spared, but others received much more serious blows. Neither the Central Bank nor the government can be solely blamed for the turmoil in forex during the pandemic.

Moves by the Central Bank and the BDDK to limit the Turkish lira swap facilities of local and foreign banks, penalize mainly private banks if their deposit ratios dropped too low in an effort to push them to grant more credit and buy government bonds, and verbal attacks on foreign banks and investors have raised eyebrows in global equity markets. Such protectionist moves are being widely adopted around the world at such an extraordinary time. Protectionism, of course, was already on the rise before the pandemic, for its own reasons.

Turkey has every right to take steps to protect its markets, but those steps should be wellreasoned and targeted. Otherwise, they may accelerate the exodus of capital, as seen in recent months. As the saying goes: You shouldn’t burn the whole blanket to get rid of a single flea. Such blanket decisions will hurt all investors.

However, Turkey still has a chance reverse the flow of money. Reforms and a strong commitment to free market rules can do that.

On our cover this week, we try to explain another dilemma, this time between shopping center investors and retail brands. As a first step to reopening the economy, shopping centers may play a critical role. Retail brands, on the other hand, expect more than the opening of malls. A search for a common solution is underway, but won’t be easy.

This issue will be a double issue. We will be back at the beginning of June, just after Ramadan holiday. Hopefully in a new and fresh era.