The 52-week cumulative purchases of nonresidents' government domestic debt securities and stocks hit its highest level since 2013, reaching $11.8 billion, Central Bank of the Republic of Turkey (CBRT) data revealed yesterday.
The 52-week cumulative transactions revealed that nonresidents made a net purchase total of $9 billion in government domestic debt securities and $2.8 billion in stocks.
Foreigners seem to have assessed the fact that data regarding economy confidence, consumer confidence, preliminary manufacturing and exports points to a positive outlook after the year 2017 in which the Turkish economy is expected to have grown by 6 to 7 percent.
There are increased expectations that inflation, which is the most important element of pressure on Turkish lira assets, will decline on an annual basis due to the ongoing risk appetite in global markets, and the CRBT's persistence on a tight stance - which has pushed domestic and foreign investors to incline toward these assets. According to the data announced today, annual inflation declined to 10.35 percent from 11.92 percent.
The macroeconomic data for January, which was released in the last 2 weeks, indicates that the positive atmosphere in 2017 will continue into the first quarter of this year.
Ziraat Bank economist Bora Tamer Yılmaz said the manufacturing industry entered the new year in a more accelerated momentum than the service sector, adding: "Dynamism in Europe is giving impetus to the countries in its own value chain. In parallel, exports in Turkey surged by 16.3 percent to $12 billion on an annual basis in January. Also, Asia's export data confirms the vitality of global activity."
DenizBank investment group strategist Orkun Gödek noted that the nonresident portfolio, which flowed slightly above $10 billion throughout 2017, maintained its acceleration in the first month of 2018.
According to Gödek, despite the developed country's central banks' efforts to normalize their monetary policies, the Turkish lira has yet to take full advantage of the "cheap dollar" approach created by global optimism. He further stated that currencies assessed along with the lira have appreciated by 4-14 percent against the dollar since Dec. 12 and the lira's appreciation performance has been limited to 2 percent.
Expressing that it is possible to talk about a discount of at least 5-6 percent in the lira compared to its equivalents, Gödek stressed: "While the tendency in the stock market has generally remained parallel to foreign assets, the interest and exchange rate approaches have remained limited and responded to short-term risks. If external circumstances allow some time, we expect normalization to reflect on these items as well."