Wary Turks aren’t buying Erdogan’s economic promise yet

Wary Turks aren’t buying Erdogan’s economic promise yet
Turkey’s coronavirus surge has added to the woes of a ruling party desperate for an economic revival. (Reuters)
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Updated 02 December 2020

Wary Turks aren’t buying Erdogan’s economic promise yet

Wary Turks aren’t buying Erdogan’s economic promise yet
  • Turks have faced mostly double-digit unemployment and inflation for four years

ISTANBUL: Turkish President Recep Tayyip Erdogan’s promise of a new economic era triggered a foreign-driven rally in the lira, but local investors have yet to be persuaded that policies they say have dragged on economic prospects for years will be reversed.

Interviews with local portfolio managers, gold sellers and business owners suggest Erdogan’s biggest challenge will be convincing Turkish individuals and companies he can turn last month’s rhetoric of market-friendly reforms into reality.

“There is a protective reflex,” built up after years of lira depreciation, said Baris Hocaoglu, general manager of Istanbul Portfoy, which manages 7 billion lira ($900 million) of assets and recommends a “cautious stance” to clients.

“Until the trust and stability are established, especially individual investors’ interest in gold and foreign exchange (FX) will continue.”

Local wariness also reflects other risks, including the resurgent coronavirus pandemic and signs of friction within Erdogan’s government that could worsen.

Turks have faced mostly double-digit unemployment and inflation for four years. Twice since mid-2018 the economy has sharply contracted while half the lira’s value has evaporated, setting both back compared with peers.

Early last month, convinced by allies his economic policies were failing, Erdogan installed a new central bank chief who hiked interest rates to 15 percent to boost the record-low currency.

Foreign investors, who hold only 5 percent of Turkish bonds, then chased some of the highest yields in emerging markets, pushing the lira 12 percent higher. That rally was partially reversed by Turks, who still face negligible deposit rates, buying $4 billion of gold and foreign exchange in two weeks.

Locals could warm to the lira if deposit rates are pulled higher by further monetary tightening, analysts say.

But for now they remain cool. Bankers say that for the first time in five years some Turkish energy importers are requesting market quotes for dollars and euros, while at Istanbul’s Grand Bazaar gold coins and jewelry are selling at $3 above international prices.

Mehmet Ali Yildirimturk, deputy head of a city gold shops association who operates at the Bazaar, said only “concrete actions” from the government will win trust. “Until then the local investor is still interested in physical gold,” he said.

A growing reason for caution is the coronavirus surge that has closed the doors to restaurants and schools, leaving people out of work as they were in a spring lockdown.

On Monday, Erdogan announced curfews and said the government is taking careful steps to avoid “a full-blown economic and social crisis.” Yet some in the vast small-business services sector see more signs of mismanagement.

“We are facing unjust competition and don’t have the big budgets like supermarkets Metro, Migros, Carrefour,” said Oktay Dagasan, 42, who runs a small Istanbul liquor shop that must now close early.

“We are finished economically, and are buried under credit card and loan debt,” he said. The government should give tax and rent support and “come out among the people and see what it is like,” he added.

In an interview, Numan Kurtulmus, deputy chair of Erdogan’s ruling AK Party (AKP), said high unemployment and current account deficits will be solved as part of the new approach but it would take time.

“We will have a difficult period ahead of us, especially because of the pandemic,” he said last week.

The AKP has slipped in opinion polls and one of its founding members resigned from a key post at the presidency last month after his calls for judicial reform were rejected by Erdogan and the leader of his nationalist coalition partner.

Some analysts say risks of an early election have risen along with prospects of economic sanctions, given a row with the EU over territorial waters and expectations of tougher US bilateral ties under a Joe Biden White House.

“The public closely follows the ongoing political conflict in Ankara, and senses that the end might be an early election or a costly conflict with the West,” said Atilla Yesilada, analyst at GlobalSource Partners.


Wafrah approves impeachment of board, audit committee

Wafrah approves impeachment of board, audit committee
Updated 17 January 2021

Wafrah approves impeachment of board, audit committee

Wafrah approves impeachment of board, audit committee
  • The decision came during the company’s ordinary general assembly meeting (OGM) held virtually through the Tadawulaty system on Jan. 14
  • the meeting elected the board of directors for three-year term starting Jan. 14

Wafrah for Industry & Development Co. approved the impeachment of the board of directors and audit committee, as applied for by shareholders in possession of 7.14 percent of the total shares of the company, the firm said in a bourse filing today, Jan. 17.

The decision came during the company’s ordinary general assembly meeting (OGM) held virtually through the Tadawulaty system on Thursday, Jan. 14, 2021.

Additionally, the meeting elected the board of directors for three-year term starting Jan. 14, 2021. The members elected include Ayad Abdulrahman Mohammed Al-Bunyan, Mohammed Abdulrazaq Aboud Al-Baghdadi, Faisal Mohammed Abdulaziz Al-Khudairi, Mohammed Saud Abdalla Al-Samari, Faisal Abdalla Mohammed Al-Qahtani, Mohammed Yagoub Yossif Al-Mukhadab, and Mohammed Hindi Shujaa Al-Otaibi.

In July 2020, Wafrah said it received a letter from shareholders, owning around 7.14 percent of capital, requesting to take regulatory measures with regards to the dismissal of the current board of directors and the appointment of a new one, Argaam reported.

The company had also received a letter from shareholders, owning around 7.14 percent of the company’s capital, requesting dismissal of the current audit committee and its restructuring.