Latest Situation

Several data has been released last week. Gradually escalating, tensions in Argentina have started to spread all over the world. Turkish quarter 2019 GDP is to be announced by the beginning of September. Let me provide you with a quick summary of what is anticipated.

As shock waves through the Argentine stock market as well as global markets continue, Turkey also had a sharp impact but luckily there haven’t been any drastic changes in FX market.

The fact that Turkish investors and residents are ready to sell dollars, since they buy it at higher levels, does put pressure on Turkish FX market. On the other hand, the fact that those who want to buy foreign exchange do not actually have any Turkish Liras to do that does prevent exchange rates from rising. Another lucky event that saved us from facing speculative market attacks was the fact that people who wanted not to miss the opportunity to sell dollar, since USD/TRY parity hit around 5.60 during the Eid al-Adha Holiday.

In the meantime, we can observe that people have been showing great interest in Turkish bills and bonds. While Bonds are being traded with negative interest rates in a lot of European countries now, the fact that benchmark bond rate remains around 15% in Turkey is very appealing to investors indeed.

“No signs of improvement…”

I do not think that the positive outlook of unemployment data or budget performance, when compared to previous months, brings too much of a positive impact on markets, because every detail underlying both data tells me that these fortunate developments are nothing but temporary. I must also indicate that the “seasonal adjustment” approach seems pretty unrealistic when used in certain parameters, particular jobless rate, let alone the fact that these adjustments, which were implemented on the pretext of Tourism Season from February to November, only served to make things worse.

It’s just like you’re saying “You don’t actually work here” to a person who started to work at a hotel in February-October period. After all, all candidates that are hired by an employer are considered “employees” even though they were hired for only one season or more. And you can’t do your jobless rate calculations taking into account the fact that they will be out of a job when the season is over. The same goes for GDP growth data as well. It’s not fair to calculate GDP by making adjustments based on certain sectors’ seasonal activities since such unfounded calculations would only serve to mislead the researchers.

As for the industrial data: there’s really nothing much to say as we don’t see any signs of improvement.

I think I would not be wrong in saying that Turkey too was exposed to shock waves in Argentina during the short trading week ended last week. The impact, however, was limited, affecting only stocks.