March / 2024 Post-Election Türkiye - Infrastructure Works for the IMF?
The current TCMB administration continues the same practices as in the previous period.
While rumours of a "return to rational politics" are circulating, the practices show the opposite.
They continue their sales without interruption to keep the dollar rate. Last week, around 300 - 400 million dollars were sold per day. Although it is the tourist season, they have difficulty keeping the dollar.
In order to attract the attention of foreigners, very good presentations are made. However, all of them remain on paper. Unfortunately, we cannot see any of them in practice.
While the old and weird policies continued, new ones started to be added on top of them. New Quotas for Gold.
In the meantime, it seems as if there is a secret agreement between the economic management and the banks. When you follow the practices of allowing loan interest rates to increase(!) and reducing deposit rates, it seems as if a system is being created that provides an advantage to the finance sector.
Erdogan is not very involved in the economy at the moment, but there is always the risk of interference. Especially in this environment where interest rates are increasing, and banks do not want to give loans, Erdogan may emerge at any time in case of economic contraction. Economic shrinkage on the way to the election is the last thing Erdogan would want. The time for the announcement of affordable loan packages is not very long. It looks like 2-3 months later.
Figures from Turkey;
Bist100 has achieved a return of 76% in TL and 31% in USD in the last three months.
The Money Market Board will announce the interest rate decision on August 24, 2023. The minimum expectation of the market is 500 basis points and above. At a lower rate, they will not be credible.
The current account deficit recorded a record-high increase in the item "Net Errors and Omissions" in June. There is a risk of withdrawal of money that enters without foundation and without investment.
Technically speaking, there is no fight against inflation.
After the CBRT announced the year-end inflation target as 58% (this year-end target has been given as a duty to TUIK)
TUIK's annual July inflation figure 47.8%
The independent ENAG inflation figure continued to come in at 122% and above.
It is a fact that the inflation experienced by the citizen when he goes to the market is higher.
Investment in Turkey;
While the inflation figures in the country were like this, the citizens, unfortunately, did not have any space to invest.
- Gold; The new restrictions on gold production and imports last week and gold prices caused price differences between banks and the market. However, when we look at it on an ounce basis, we see that the FED has suppressed it.
- TL Deposit; While the interest rates have been reduced rapidly in the last two months, they have decreased to 25-27% per annum at present.
- USD/TL; With the interventions in the exchange rates, the dollar savers, unfortunately, lose value in the face of inflation.
- USD Deposit; Banks give interest on USD deposits at a rate of 3-5% per year. Moreover, even in the homeland of USD, there are banks that give 7% annual interest on USD deposits.
- KKM (Currency Protected Deposit); Technically speaking, this product is just a perception management product that is equivalent to a demand deposit yield (zero). (none of the conscious citizens do KKM)
- Bist100; It continues to break records based on TL, its return in the last three months is around 76%. We have seen that the volatility is very high in the last two trading days. However, every moment contains the potential for a hard fall. Attention.
- Investment Fund; In real terms, it is a system in which fund management earns more, if you invest in the same instrument instead of the relevant fund, you will earn more, but with good perception, the main profit is left to the fund managers. For example, buying physical silver instead of silver funds.
Except for the investment products I listed above, unfortunately, none of the current freak systems in the country, which are the main ones, have changed. Justice, Education, Economy, Agriculture etc. No reforms were made in any of the areas. They are trying to bring money to the country from foreign investors with only speeches and effective presentation methods without reforming and taking concrete steps. The need for foreign exchange is increasing day by day. Realizing this, foreign investors choose the "holding longer" method, even if they have balances to bring.
Foreign and Conscious Investor; During the Naci Ağbal period, the foreign investor was deceived and suffered a great loss, and they did not forget about it. They want to see the Rational, Modern and Realist steps implemented. Not only that, they want to know that the implemented applications will continue. Briefly, Guven asks. They know very well that the election economy will be implemented before the March 2024 elections and that none of what is said will actually be done.
After the election, We will see very harsh tax hikes in the country. I think that the USD/TL exchange rate, which they have been holding by force, will be put down, and there will be a very sharp devaluation, which will create very high inflation. Since the need for foreign exchange will reach its maximum level, they will need to find foreign exchange immediately. Due to the conditions of the period, that is, the country's ratios and figures will be very bad, and it will be almost impossible to find resources from abroad. Or they will be able to find partial resources by making huge concessions.
Also, in addition to the problems for the country, there are statements made by Saudi Arabia in the upcoming period under the name of regulation "to reduce oil production." These statements mean that oil prices will rise. This means that it will make an extra negative contribution to Turkish inflation.
To summarize briefly, In order for a real foreigner to invest in Turkey, it is necessary first of all to see the realization of reforms, namely, the realization of the rhetoric, and to be convinced that they are permanent. Foreigners care a lot about the March 2024 elections. The 2023 election economy won Erdogan the election, but the tax hikes and high inflation after the election made it difficult for the citizens. After the March 2024 elections, there will be no elections until 2028.
Increases made / to be made to civil servants, workers, employees and retirees until the March 2024 election will not be made until 2028 after March 2024. Even if it is done, it will be very small. Since the salary and wage increases based on the inflation rates of TUIK, which is already an official institution, are far below the real inflation, the citizens are constantly oppressed. Unfortunately, this will continue to intensify.
In case of applying the election economy again 4-5 months before the March/2024 elections, after the election;
- First huge devaluation
- Then tax hike rain
- Hyperinflation process
- Low inflation figures and melting wages and incomes
- Finally, It is a reality that it will be very difficult for the citizens of the country until the elections in 2028 with the rules (austerity policies) to be brought within the (possible) IMF agreement.
My predictions (end of the year):
Gold ounce 2050 - $2200 (Fed statements and data are important)
Silver $26 - $28 ounce (Fed statement and data important)
USD / TL 30 - 33
EUR / TL 33 - 36
Oil 83 - 90 $ (Saudi Arabia explanations should be followed)
Bist100 - 8100 TL (my expectation after a fix)
The above information is in no way an Investment Advice. I shared my thoughts with you. I adjust my projection accordingly.
March / 2024 Post-Election Türkiye - Infrastructure Works for the IMF?
The current TCMB administration continues the same practices as in the previous period.
While rumours of a "return to rational politics" are circulating, the practices show the opposite.
They continue their sales without interruption to keep the dollar rate. Last week, around 300 - 400 million dollars were sold per day. Although it is the tourist season, they have difficulty keeping the dollar.
In order to attract the attention of foreigners, very good presentations are made. However, all of them remain on paper. Unfortunately, we cannot see any of them in practice.
While the old and weird policies continued, new ones started to be added on top of them. New Quotas for Gold.
In the meantime, it seems as if there is a secret agreement between the economic management and the banks. When you follow the practices of allowing loan interest rates to increase(!) and reducing deposit rates, it seems as if a system is being created that provides an advantage to the finance sector.
Erdogan is not very involved in the economy at the moment, but there is always the risk of interference. Especially in this environment where interest rates are increasing, and banks do not want to give loans, Erdogan may emerge at any time in case of economic contraction. Economic shrinkage on the way to the election is the last thing Erdogan would want. The time for the announcement of affordable loan packages is not very long. It looks like 2-3 months later.
Figures from Turkey;
Bist100 has achieved a return of 76% in TL and 31% in USD in the last three months.
The Money Market Board will announce the interest rate decision on August 24, 2023. The minimum expectation of the market is 500 basis points and above. At a lower rate, they will not be credible.
The current account deficit recorded a record-high increase in the item "Net Errors and Omissions" in June. There is a risk of withdrawal of money that enters without foundation and without investment.
Technically speaking, there is no fight against inflation.
After the CBRT announced the year-end inflation target as 58% (this year-end target has been given as a duty to TUIK)
TUIK's annual July inflation figure 47.8%
The independent ENAG inflation figure continued to come in at 122% and above.
It is a fact that the inflation experienced by the citizen when he goes to the market is higher.
Investment in Turkey;
While the inflation figures in the country were like this, the citizens, unfortunately, did not have any space to invest.
- Gold; The new restrictions on gold production and imports last week and gold prices caused price differences between banks and the market. However, when we look at it on an ounce basis, we see that the FED has suppressed it.
- TL Deposit; While the interest rates have been reduced rapidly in the last two months, they have decreased to 25-27% per annum at present.
- USD/TL; With the interventions in the exchange rates, the dollar savers, unfortunately, lose value in the face of inflation.
- USD Deposit; Banks give interest on USD deposits at a rate of 3-5% per year. Moreover, even in the homeland of USD, there are banks that give 7% annual interest on USD deposits.
- KKM (Currency Protected Deposit); Technically speaking, this product is just a perception management product that is equivalent to a demand deposit yield (zero). (none of the conscious citizens do KKM)
- Bist100; It continues to break records based on TL, its return in the last three months is around 76%. We have seen that the volatility is very high in the last two trading days. However, every moment contains the potential for a hard fall. Attention.
- Investment Fund; In real terms, it is a system in which fund management earns more, if you invest in the same instrument instead of the relevant fund, you will earn more, but with good perception, the main profit is left to the fund managers. For example, buying physical silver instead of silver funds.
Except for the investment products I listed above, unfortunately, none of the current freak systems in the country, which are the main ones, have changed. Justice, Education, Economy, Agriculture etc. No reforms were made in any of the areas. They are trying to bring money to the country from foreign investors with only speeches and effective presentation methods without reforming and taking concrete steps. The need for foreign exchange is increasing day by day. Realizing this, foreign investors choose the "holding longer" method, even if they have balances to bring.
Foreign and Conscious Investor; During the Naci Ağbal period, the foreign investor was deceived and suffered a great loss, and they did not forget about it. They want to see the Rational, Modern and Realist steps implemented. Not only that, they want to know that the implemented applications will continue. Briefly, Guven asks. They know very well that the election economy will be implemented before the March 2024 elections and that none of what is said will actually be done.
After the election, We will see very harsh tax hikes in the country. I think that the USD/TL exchange rate, which they have been holding by force, will be put down, and there will be a very sharp devaluation, which will create very high inflation. Since the need for foreign exchange will reach its maximum level, they will need to find foreign exchange immediately. Due to the conditions of the period, that is, the country's ratios and figures will be very bad, and it will be almost impossible to find resources from abroad. Or they will be able to find partial resources by making huge concessions.
Also, in addition to the problems for the country, there are statements made by Saudi Arabia in the upcoming period under the name of regulation "to reduce oil production." These statements mean that oil prices will rise. This means that it will make an extra negative contribution to Turkish inflation.
To summarize briefly, In order for a real foreigner to invest in Turkey, it is necessary first of all to see the realization of reforms, namely, the realization of the rhetoric, and to be convinced that they are permanent. Foreigners care a lot about the March 2024 elections. The 2023 election economy won Erdogan the election, but the tax hikes and high inflation after the election made it difficult for the citizens. After the March 2024 elections, there will be no elections until 2028.
Increases made / to be made to civil servants, workers, employees and retirees until the March 2024 election will not be made until 2028 after March 2024. Even if it is done, it will be very small. Since the salary and wage increases based on the inflation rates of TUIK, which is already an official institution, are far below the real inflation, the citizens are constantly oppressed. Unfortunately, this will continue to intensify.
In case of applying the election economy again 4-5 months before the March/2024 elections, after the election;
- First huge devaluation
- Then tax hike rain
- Hyperinflation process
- Low inflation figures and melting wages and incomes
- Finally, It is a reality that it will be very difficult for the citizens of the country until the elections in 2028 with the rules (austerity policies) to be brought within the (possible) IMF agreement.
My predictions (end of the year):
Gold ounce 2050 - $2200 (Fed statements and data are important)
Silver $26 - $28 ounce (Fed statement and data important)
USD / TL 30 - 33
EUR / TL 33 - 36
Oil 83 - 90 $ (Saudi Arabia explanations should be followed)
Bist100 - 8100 TL (my expectation after a fix)
The above information is in no way an Investment Advice. I shared my thoughts with you. I adjust my projection accordingly.
For your information.
Best regards, 12 August 2023
Cumhur Akmese (CA)
linkedin.com/in/cumhurakmese/