[ad_1]
Written by Jonathan Spicer and Mark Jones
ISTANBUL/LONDON (Reuters) – U.S. investment giants Pimco and Vanguard have been buying local assets in Turkey in recent months, after years of erratic policymaking under President Tayyip Erdogan left the country with high interest rates. senior executives said they are betting on keeping the company.
Two of the world’s largest investors, with combined assets under management of nearly $10 trillion, are under renewed economic orthodoxy, including interest rate hikes in June after President Recep Tayyip Erdogan’s re-election, according to interviews with executives. Since then, it has taken a constructive stance toward Turkey.
Pimco and Vanguard did not elaborate on the specific size of the deal, but their investment is a sign of confidence after years of an exodus that has largely pushed Turkey out of the world’s emerging markets. There is.
“With tightening financial conditions to curb spending and contain inflation, and the gradual easing of regulations that distort asset prices, we remain positive on Turkish assets, especially local currency assets,” Managing Director Director and Head Pramol Dhawan said. Pimco Emerging Markets manages nearly $2 trillion in assets.
Vanguard, the world’s second-largest asset manager with about $7.5 trillion under management, hosted Nick Eisinger, co-head of emerging markets active fixed income, and several other investors for a meeting late last year. After visiting Turkey, I bought Turkish municipal bonds without hedging.
“It was a bit of a turning point,” Eisinger said in a separate interview, noting that benchmark yields had fallen 500 to 600 basis points from November to mid-December before partially recovering.
Foreign interest hit a six-year high last month, while credit default swaps (CDS), a key risk measure, have fallen to more than half the level they were in May, when Turkey re-elected President Recep Tayyip Erdogan.
This comes as President Erdogan oversaw a policy of lower interest rates in the face of soaring inflation and tightened authorities’ control over foreign exchange, bond and credit markets, leaving most of the markets under state control. It marks a dizzying departure from the era when Turkey was largely abandoned. .
However, the president appointed Hafezeh Gey Erkan as a new cabinet minister and head of the central bank in June, and subsequently raised interest rates by 3,400 basis points to 42.5% to curb inflation, which was nearly 65% last month.
The central bank said it would halt interest rate hikes as soon as possible but would maintain tight monetary policy for as long as necessary. Authorities have also begun easing dozens of regulations to free up banks and financial markets.
(Reporting by Jonathan Spicer and Mark Jones; Editing by Emelia Sithole-Matarise)
[ad_2]
Source link
