Turkish bonds could be among the best-performing emerging bonds in 2024, according to Deutsche Bank.
Deutsche Bank’s information note stated that it is too early to re-enter the Turkish bond market despite the current repricing and recent aggressive interest rate increases.
It is stated in the information note that there are still a few more months to return to a little more optimism structurally, “We believe that Turkish local bonds will be among the best-performing emerging local bond markets in 2024.”
In the information note, it was emphasized that Turkiye’s growth forecast was increased to 4%, as growth was above expectations in the second quarter and budget deficit projections were above expectations.
The information note noted that inflation had paused at 61% due to the softening in domestic demand, the downward trend in inflation and the stability in exchange rates, and included predictions that inflationary pressures would continue in the following months and inflation could be at 69% at the end of the year.
In the note, it was noted that the depreciation of TL, the rise in oil prices, the continuity of services inflation and the rise in inflation expectations increased the upside risks in inflation.
In Deutsche Bank’s note, it was pointed out that the Central Bank of the Republic of Turkiye’s decision making above expectations regarding monetary tightening, the new practices in the macroprudential framework that started to be implemented by emphasizing TL deposits open to protection, and the bank’s transparent communication were surprising positives for TL.
In the information note, a tactical buying suggestion was made for TL.
Source: AA / Prepared by Irem Yildiz