An analyst at Standard & Poor’s is making some aggressive comments about the prospect of a hard landing in Turkey. It sounds a bit hysterical here.
The rating agency is now watching to see if Turkey will overheat because of what they consider a “too accommodative” rate policy and expanding credit.
The comments came in a TV interview S&P’s Frank Gill gave to Bloomberg, and reported by Reuters.
S&P also concedes that Turkey’s sovereign balance sheet has dramatically improved — the budget surplus is rising and debt is falling as a proportion of GDP — so you have to wonder where the sudden alarm is coming from.
Turkey did not build a mountain of fixed-income assets like China did, so it is not vulnerable to problems in other countries’ bond markets. And it has a reasonable fiscal position, including, as S&P points out, a slight surplus.
We aren’t bullish on Turkish equities quite yet, but think that after the weak summer reporting system TUR and individual stocks could be a buy:
By that point, we hope there will be some stability in the currency markets and that the country can show us that its current account deficit is shrinking.