Mehmet Gerz: US, Dollar / TL and Stock Market Interest Rates

According to Robin Brooks, chief economist at IIF, which we can call the international banking association, US bond yields began to rise for four reasons:

1) Increase in public debt as a result of high public aid packages

2) Treasury by borrowing much more than the amount purchased by the FED

3) The risk of warming and inflation in the economy as a result of the widespread use of corona vaccination.

4) The new government’s agenda that ignores all these risks

The same economist compares this process in 2021 with the one experienced in 2013. At that time, even Ben Bernanke’s announcement of his intention to curb monetary expansion sent interest rates skyrocketing. This time, the Fed promised not to raise interest rates even if inflation in the United States exceeds 2%. However, this attitude may cause the Fed to lag behind the growing risk of inflation and raise interest rates excessively.

Robin Brooks and IIF Turkish economist Uğraş Ülkü have made fairly accurate predictions on the dollar / TL issue in recent years. They noted that 7.5 is a reasonable level even when the USD / TL rate exceeds 8.5. CBT’s resolute stance against inflation because the dollar exchange rate falls below 7 again if you are viewing it as a risk in terms of Turkey’s competitiveness.

National investors rediscovering capital markets

Most household savings remain as deposits in banks. In February, 1.5 trillion TL of national money in the banks; There are TL 3.2 trillion in savings, including TL 1.7 trillion in foreign currency and gold deposits.

In the capital markets, which are the non-banking sector, the savings of domestic investors reached TL 1 trillion with an increase of 32% in the last year. In the capital market, which is detailed in the following table, an evolution weighted by shares stands out.

The number of national investors in the Stock Market increased by 925 thousand in the last year, reaching 2 million 156 thousand. The total equity portfolio of the domestic investor almost doubled and exceeded TL 400 billion. There is an average of 188 thousand 507 TL of shares in a portfolio per investor.

Although there appear to be more than 3 million mutual fund owners, we estimate that about half of them are liquid (money market) fund accounts at banks. The national investor has approximately 150 billion TL in all types of investment funds such as money market, variable and stocks. Mutual fund ownership per capita is TL 48,444, a quarter of the average equity portfolio.

The number of affiliates to the private pension system has not exceeded 7 million in the last year. With the appreciation in the markets and ongoing payments from participants, total assets grew by 25% in the last year and reached TL 157 billion. However, the average PPS portfolio per capita is only TL 22,756. Sufficient per capita savings for the supplementary pension have not yet been achieved.

In fact, PPS is a prudent accumulation tool that serves a strong infrastructure and personal and social well-being. To overcome the stagnation of recent years, a next-generation reform is needed to make BES easier, more transparent and customer-oriented.

Investments in the capital market cover areas that require expertise, such as private stocks, funds and pensions. In addition, the financial consulting needs of citizens on credit and credit cards are increasing. With regard to the financial well-being of households on these issues, as well as in developed countries of a similar system of investment consulting financial advice, it is required to start in Turkey.

Mehmet Gerz

Ata Asset Management

General Manager / CIO


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