A rare positive comment on the Turkish Equity Market

This is a very speculative brief comment on the Turkish equity market.

From its 2013 highs, the leading Borsa Istanbul 30 index is down around 70% in USD terms. So 100 USD has become 30 USD.

In countries experiencing political and/or economic shocks, equity market in USD terms tend to find support after a while due to: (i) capital preservation choice of locals that leads shifts in to variable return assets that can outpeform inflation and/or currency depreciation, (ii) international investors that are both short term and medium term in nature.

While exact timing is hard to pinpoint, the equity market within a timespan of couple of months to 5 years would end up around losing 40% in USD terms to gaining 20% compared to the historical peak before this shock. The obviously wide gap is due to success of economic policies implemented.

As such, with 5 years of decline behind and an equity market that has lost 70% in USD terms, I’d expect even with the most toned down recovery for the loss to abate to 40% in USD terms in less than a year. That would mean the current 30 USD in market could 2x to 60 USD in that time frame. Even better if the politics lend a hand as well — which could 3x+ the return potential.

In a bloodbath setting where a stoic but positive expectation is but completely ignored, I want to put this global comparative shock-stricken market analysis out as a side note.