Foreign investors’ risk appetite, which has decreased due to the coronavirus epidemic, reduces demand for developing countries. In Turkey, the share of foreigners in government domestic debt securities decreased to 7.01 percent in the week of April 10. Just 1 year ago, the share of foreigners was 14.82 percent. Foreign investors are left with 57.8 billion lira, or 8.5 billion dollars, of government securities. In response to the falling demand from foreigners, the stock held by the Central Bank increased to 44.5 billion lira, or 6.6 billion dollars, doubling the amount at the beginning of the year. Even before the coronavirus outbreak, analysts’ attention was on foreigners’ exit in the stock and bond markets, as well as debt securities. However, this rise accelerated even more with the coronavirus outbreak. While the foreign stock was 91.6 billion lira at the beginning of the year, it decreased to 57.8 billion lira in the week of April 10. Thus, the share of foreigners in the GDDS stock decreased to 7.01 percent. The share of the Central Bank increased from 2.5 percent to 4.78 percent. In April 2019, the share of foreigners’ GDDS stock was at 14.95 percent. There was a decline of almost 8 points.
It’s not just specific to Turkey
ÜNLÜ & Co – MORE Financial Consultancy Manager Murat Akyol stated that this situation is not specific to Turkey and said, “Data shows that the total outflow from bonds in developing country markets since the beginning of the year is around 30 billion dollars. “Unsurprisingly, we see that investors are turning to safe havens that are considered less fragile,” he said. Akyol stated that after the 2008 crisis, foreigners’ interest in developing country bonds increased, and we saw the results of this in Turkey, and said: “While global markets were experiencing the coronavirus epidemic, this time the interest in bonds differed. “When we examine the Central Bank’s portfolio movements of foreign residents, we can clearly see that foreigners’ bond positions continue to decrease.”
Our vulnerabilities make the job difficult
Murat Akyol noted that although liquidity conditions increased again as a result of the measures taken in both monetary and financial policies, the resulting situation can be explained by the fact that the two crises are structurally very different from each other. Akyol said, “We can observe the problems in sharp deteriorations in macroeconomic data. Therefore, under the current conditions, it is possible to consider the outflow in developing country bonds as a normal situation. “But of course, Turkey’s unique economic fragilities also make Turkey’s job a little more difficult in this process,” he said.
Source: https://www.dunya.com/finans/haberler/yabancinin-dibste-payi-7ye-indi-haberi-468176
