BY ALAATTIN AKTAS
It seems that a trend has emerged. Foreigners have become equity and government debt securities (GDS) buyers for six weeks.
The net inflow that started in the week ending on November 3 increasingly continues, according to the Central Bank (CB) data. Foreigners’ net equity and GDS acquisitions totaled USD 562m and USD 891m, respectively, in the week ending on December 8.
Thus, the 6-week net equity and GDS buying reached around USD 1.4bn and USD 1.3m, respectively. These figures show the net inflow adjusted by the CB from price movements and FX rate changes. The inflow in GDS points to outright purchases and the amounts brought as reverse repo and collateral aren’t included in these figures.
Equities held by foreigners have reached USD 30.7bn as of December 8. Their GDS obtained through outright purchases totaled USD 2.4bn in the same period.
The impact of the upgrade in Turkey’s credit rating by credit rating institutions significantly impacts the increase in foreigners’ interest.
Measures by the new economy administration have brought such a change to the agenda.
On the other hand, the rapid decrease, which started in the FX-protected TRY deposit accounts (KKM) at the end of September, has significantly slowed for three weeks.
The total amount in KKM rapidly declined between September 29 and November 17, when the weekly decrease didn’t fall below TRY 70bn. Moreover, some decreases reached TRY 86bn weekly.
However, the rate of decrease suddenly dropped in the week ending on November 24.
The decrease, which hovered around TRY 75bn on average monthly, fell to TRY 29bn and TRY 25bn in the two weeks following November 17.
KKM opened in lira, accounted for 30-40% of the total KKM, and some exited from the system. The remainder intends to maintain their accounts. Owners of them won’t look at the interest rate. They will wait for the FX rate hike. The decline in KKM will be slower as KKM opened in lira significantly decreased.
KKM dropped by TRY 13bn in the week ending on December 8. But we also don’t know if this decrease stemmed from FX-converted KKM or KKM opened in the lira.
It’s hard for those with FX-converted KKM to exit the system. Because they have tried to save FX for years, and a decrease in KKM interest rate won’t affect them that much.
