By. Justin Mays
Foreign investors who withdrew from the Turkish market are returning to invest in Turkey with indicators promising some of the largest returns in emerging markets. Since November 2020 more than $15 billion has flowed into Turkish assets, after President Recep Tayyip Erdogan overhauled leadership roles at the Central Bank and the Treasury and Finance Ministry pointing towards a new market-friendly era. Turkish stocks have also had a record 33 percent high rally since November 2020. Finance, manufacturing and energy are among the sectors that attract the highest amount of FDI in Turkey, accounting for more than 60% of total stocks. Foreign bond ownership has begun to bounce back in recent months above 5 percent, from 3.5 percent although it still leaves room to grow to the 20 percent it was at four years ago.
According to Reuters, who interviewed more than a dozen Turkish bankers and foreign money managers, those foreign direct investment inflows could double by mid-2021, especially if larger investment funds take longer-term positions. Six Turkish bankers told Reuters they predict that 10 percent of the debt by mid-year on between $7 to $15 billions of inflows will be held by foreigners. Deutsche Bank expects about $10 billion arriving as a result of these key economic reforms. Despite the pandemic in 2020, Turkey received $8 billion according to Turkey’s Investment Office and the decrease in FDI was at a slower pace than global trends. International direct capital investments in Turkey reached $5.7 billion last year, a slight decrease from $5.9 billion in 2019 with Italy, the US and UK leading in capital investments. The top sectors for investment were the finance sector at $1.39 billion followed by the information and communication sector at $1.37 billion.
EM investors are optimistic that these bullish signals suggest that this growth will continue. Turkey's asset valuations and real rates are among the most attractive globally and International backers will continue to follow Ankara’s economic policy moves. Turkey ranked 33 out of 190 economies with regard to ease of doing business, up ten positions from 2019 in the World Bank's Doing Business Report 2020. After overlooking Turkish assets in recent years, the solid monetary stance and other recent regulatory adjustments are a welcome shift for those wanting to invest in Turkey.
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