Turkish portfolio outflows hit highest this year on political worries

ISTANBUL - Reuters

Foreign investors have sold $459 million worth of Turkish stocks and bonds so far this month, in the largest portfolio outflow this year as political concerns have grown, the Central Bank said on May 12.

Outflows totaled $298 million from the stock market and $161 million from the domestic bond market in the week ending on May 6, a day after Prime Minister Ahmet Davutoğlu said he would quit after a public rift emerged with President Recep Tayyip Erdoğan.

“The Central Bank data show that, not surprisingly, Davutoğlu’s stepping down triggered portfolio outflows from Turkey,” wrote Yarkın Cebeci of JPMorgan Chase in Istanbul.

“The total outflow ... was the largest in five months.”

Investors, resident overseas, owned $44.1 billion Turkish Liras worth of Turkish equities on May 6, compared with $50.28 billion the week before, the data also showed.

Davutoğlu’s departure could mean delays in reforms, an early election and more uncertainty about the stewardship of the economy when private sector debt is high and savings are low.