How will we keep foreigners?
It’s obvious that foreigners are pretty slow this year on buying stocks and government debt securities in Turkey. Factors such as the backdating of the elections, negative reports from international rating agencies and the change in the political system have greatly reduced the interest of foreigners in Turkey. There was not that much of an exit following the elections but there was also no sign of a return.
The Central Bank announced the transactions of foreigners last week and we saw that there is a worry-
ing exodus. Foreign investors made a net outflow of $210 million in stocks and $256.4 million in government debt securities.
In addition, foreigners’ net sales of shares from the beginning of the year until July 20 have reached $1.26 billion. Foreigners have made purchases of only $94 million in
government debt securities over this time. In other words, in total there has been an exit of $1.16 billion in stocks and government debt securities so far this year.
So comparatively, what was the transaction outlook from the beginning of 2017 to July 21? Foreigners bought $2.68 million in shares and $5.88 billion in government debt securities during this period. The total net purchase amount reached $8.56 billion.
From an inflow of $8.6 billion to $1.2 billion of outflow…Based on these figures, is it any wonder currencies are at their current levels!
Whether this state of affairs is disadvantageous or not is another question of debate. To be sure, Turkey needs this hot money. However, if we discover another source of money and thus fix the supply problem through some political steps then perhaps the outflows would be less of an issue. But in the end, one way or another, we need foreign currency to get the wheels turning and we see that foreigners are obviously avoiding bringing in this foreign exchange. The question of whether foreigners are right or wrong, whether they have hostile intentions or not, is irrelevant for the time being. The current state of affairs show that we have to take some serious steps, that’s all.