In a recent report, Citi, one of the largest banks in the USA, stated that Turkish markets are on the brink of a renaissance due to shifts in monetary policy by Turkish officials.
The report highlighted that the renewed interest in Turkish assets is driven by the normalization of monetary policy. It noted:
“We observe increasing investor interest in Turkiye after years of minimal foreign inflow into domestic markets. The performance of the Turkish lira and bonds hinges on the CBRT’s success in managing expectations critical for disinflation and reversing dollarization, implementing a clear strategy to end unconventional regulatory measures, and ensuring reliable fiscal consolidation for disinflation and current account balance.”
Citi emphasized that policymakers’ achievements in these areas will be key to improving macroeconomic visibility, supporting investor sentiment, and attracting high-quality capital flows. The report praised the CBRT’s current policy path, suggesting that monetary policy might remain tighter for longer than market expectations.
The report further noted the high premium, return, and quality of Turkish assets in the domestic market, stating:
“Credit rating agencies are reflecting policy normalization and fundamental improvements in their assessments. Turkiye’s credit rating is approaching ‘BB-‘ levels, and there could be upward pressure in upcoming reviews. Government bond issuance is expected to align with the historical average, with an anticipated supply of around $5 billion this year.”
Citi concluded by expressing a constructive outlook on the loans of Turkish companies, citing Turkiye’s historically superior performance compared to companies in other developing countries.
Source: AA / Prepared by Irem Yildiz