Weekly Hurriyet column: Impressions of Turkey from London
Below is my Hurriyet Daily News column for this week, which you can also read at the Daily News website. No cheesy titles this time around, and no wordplays, either- I have reserved those for the column itself; I particularly recommend clicking on “London calling” and “anarchy in the U.K.” But the best is the Caglayan hyperlink at the very end…
I will have an addendum, but first, I need to do the final addendum to last week’s column: I still plan (or at least hope) to write about the liquidity impact of the Bank’s latest measures. Anyway, on the the column:
London was calling, and I answered. I am in London for a short business trip, combined with a long-yearned-for vacation.
Contrary to what some claim, I did not have anything to do with anarchy in the U.K., which began, oddly enough, a couple of days after I arrived. But I would have started rioting myself had Fulham’s season opener on Saturday been cancelled because of the riots. I can’t help but love their colors.
Other than taking care of business, sightseeing with London Walks and drinking lots of beer – some rioters were complaining about beer shortages, so I might have been responsible for the disturbances, after all – I have also been talking to friends in London who follow the Turkish economy, mainly economists, finance professionals and think-tankers, as well as a couple of policymakers and journalists.
My conversations have surprisingly revealed that Turkish markets have, in a way, been a victim of their own success. As a hedge fund manager explained to me at a cafe outside his office at Westminster (not all of them are in Mayfair), locals and foreigners alike are dumping Turkish assets because they can. While not as deep as Brazil, Turkey is nevertheless one of the more liquid emerging markets.
Comparing Brazil and Turkey is a very interesting exercise in itself. The stock markets of both countries have moved together in 2011 except for a brief interval in March, and both have been the worst performers since the beginning of the year and especially in the last couple of weeks.
The London crowd, meanwhile, is becoming increasingly critical of Turkish policymaking. In fact, Turkey was often cited, along with Poland and Hungary, as one of the red flags in the region and was even identified as a vulnerable emerging market by a recent Bank of England financial markets survey.
On the monetary policy front, the confusion of the previous week’s surprise rate cut continues. While some are still skeptical of the Central Bank’s measures, even the ones with more faith acknowledge that the Bank is not doing a good job on communication.
Markets are looking for clarity and direction from policymakers, and they are not getting much of either. The fact that an economist friend was scolded by his client for having talked to policymakers “only” a couple of weeks earlier reflects the mood well. Both my live-blogging of Gov. Erdem Başçı’s TV interview on Monday and his email Q&A session with Bloomberg have been read widely.
Even more importantly, many are pointing to the contradictions in the government officials’ statements. For example, according to Prime Minister Recep Tayyip Erdoğan and Economy Minister Zafer Çağlayan, Turkey will not be affected by the global developments at all, while economy czar Ali Babacan and Başçı have opted for a more cautious tone.
In this respect, it is a good sign that policymakers have started to sound more in harmony this past week. Both Erdoğan and Finance Minister Mehmet Şimşek have been emphasizing the importance of fiscal discipline of late, while Çağlayan is wisely keeping his mouth shut.
I hope deed will indeed follow word on fiscal policy when the Medium-Term Program is announced next month.
*Emre Deliveli is a freelance consultant and contributor to Roubini Global Economics. Follow his blog, the Kapalı Çarşı, at http://www.economonitor.com/emredeliveli/.
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