Capital outflow not that ‘significant’ amid riots

ISTANBUL- Hürriyet Daily News

There were very limited capital outflows from Turkish markets during the first week of the countrywide protests in Turkey, mainly thanks to the country’s economic stability, the Turkish finance minister said during a live interview. REUTERS photo

There were very limited capital outflows from Turkish markets during the first week of the countrywide protests in Turkey, not more than $1.1 billion from Borsa Istanbul, Turkey’s main stock exchange, and $260 million from the bond markets, mainly thanks to the structural stability of the Turkish economy, Turkish Finance Minister Mehmet Şimşek said during a live interview yesterday on Turkish TV channel Kanal 7.

“We have examined how the protests had affected the financial markets thoroughly. Investors who have known Turkey and Turkey’s economy miracle very well did not quit the Turkish financial markets. Unless the riots had continued and the Turkish government had let various disinformation flows spread, much higher capital outflows could have resulted,” Mehmet Şimşek noted.

Şimşek said just $1.1 billion had gone out from Borsa Istanbul during the first week of the anti-government protest, adding that this amount was very limited as foreign investors’ money in Borsa Istanbul alone is more than $71 billion. He added that the amount of capital outflow from the $60 billion bond market was just $260 million.

Borsa Istanbul’s main share index closed 10.47 percent, a decade-low, down following investor concerns over the escalation of anti-government protests after the first weekend at the beginning of June.

The Borsa Istanbul 100 index tumbled as investors feared the demonstrations could hit the economy, and the Turkish Lira fell to 16-month lows.

Direct contact with foreign investors

Şimşek, an ex-chief economist of emerging markets at Merrill Lynch, said he proactively made contacts with many investors after the protests had begun to tell them the truth as he saw so much disinformation around.

“The first teleconference was attended by 339 international western fund managers; around 150 Asian investors attended the second. I told them what was really happening and what we did to calm down society in detail,” Şimşek said, adding that most of the investors were afraid of a loss of political stability in Turkey as they had been misled by incredibly intense disinformation.

“Unless I had proactively made such meetings with them, Turkey could have lost much higher amounts of money,” he added. k HDN