Foreign investors continued their buying spree of Turkish stocks in their longest streak in a decade, showing increased confidence in a country that is departing from its unorthodox economic policy of keeping interest rates low despite high inflation.
Overseas investors bought $179 million in local equities last week, an eighth straight week of inflows, according to the latest data from the Turkish Central Bank. Bloomberg reported Thursday that it represents the longest run of net foreign direct investment since 2013. During that period, purchases total a net $1.8 billion, while the benchmark Borsa Istanbul 100 Index has risen 61% since the May elections.
That investors are more optimistic about Turkey is welcome news for a country grappling with an acute cost-of-living crisis and sky-high inflation as well as a weakened lira. On Thursday, annual inflation hit 47.83% in July, a rise of nearly 55% compared to last year. Before 2023, Turkey had seen five years of net foreign investor withdrawals from Turkish stocks. At the start of June, foreign ownership of Turkish stocks was at a record low of 27%, according to Takasbank data. It has since risen to nearly 30% this week.
After President Recep Tayyip Erdogan was narrowly reelected in May, he appointed senior officials that subscribed to the conventional economic wisdom that higher interest tames inflation. It marks a dramatic U-turn from the president’s former economic policy, which kept rates low despite soaring prices. Two new appointees — Finance and Treasury Minister Mehmet Simsek and Central Bank Governor Gaye Erkan — support a return to conventional economic policy.
