The election is over, all eyes are on the markets: Stock market or deposits? – Last Minute Economy News

The local elections, which the markets eagerly awaited, have concluded. The ruling party, AKP, became the second party for the first time in its history.

While the results were surprising, President Erdoğan’s post-election statements supporting his economic policies reassured the markets.

While Borsa Istanbul BIST 100 Index reached its all-time high with 9,849.26 points after the election, deposit interest rates continue to be at the highest level in 22 years.

The Central Bank of the Republic of Turkey (CBRT) increased the policy rate by 500 basis points to 50 percent at the Monetary Policy Committee (PPK) meeting held in April.

After the surprise interest rate decision, interest rates on term deposits up to 3 months exceeded 60 percent.

“INFLATION IS LIKE AN ILLUSION”

While all eyes turned to investment instruments after the results of the local elections, Economist Mert Yılmaz spoke about the course of the stock market and deposit interest rates.

Mert Yılmaz stated that the stock market had no alternatives and said, “During the period when post-pandemic inflation was 85 percent, deposit interest rates were around 15-16 percent. While the stock market had no alternatives at that time, it is not like that now. Now, stock market-deposit competition has arisen again. Inflation is now high and the stock market is high.” It is true that it works, but a false belief has emerged that ‘high inflation always benefits the stock market’. Inflation is like an illusion, it shows that turnover and profits are constantly increasing. But will a new story begin for the stock market in this period of high inflation and high interest rates? “Or will he not come? In an environment where foreigners do not come, the ‘take it, give it a price’ mentality continues in the stock market,” he said.

WILL FOREIGN CAPITAL COME?

Stating that there are first impressions that foreign investors have started to come, but an environment of complete trust has not been established, Yılmaz said, “There is still a problem of trust in the markets for foreigners. Unfortunately, trust is easy to destroy, but it is difficult to restore it with the same strength. However, the first impressions in the markets are that foreigners have started to come.” “There is a partial foreign inflow to the stock market and I expect this to continue,” he said.

INVESTORS WILL PRIORITY TO SOME SHARES

Economist Mert Yılmaz emphasized that foreign investors give priority to BIST30 stocks in the stock market and continued his words as follows:

“There is one thing that stock market investors are wrong about. While the stock market is running from record to record, more than half of the stocks of most investors are 20-30 percent below the price level they bought. Because investors have not understood this; if foreigners will continue to come to the stock market, they will give priority to BIST30 stocks. Here, especially The cheapest banking sector will be preferred. The most important factor is that foreigners shape their investments according to certain criteria such as public openness, market value and liquidity amount. To date, there are not many companies that provide these in their portfolio. “It either made money or made a loss, but from now on, deposits will be an important competitor for the stock market.”

Stating that deposits are ahead of the stock market for short-term investments, Mert Yılmaz stated that the stock market should always be preferred for investments with a term longer than one year.

DEPOSIT IN THE SHORT TERM, STOCK EXCHANGE IN THE LONG TERM

Economist Yılmaz, who divides the stock market and deposits into risky and risk-free returns, said:

“Investors have earned good returns from the stock market and positive movements will be seen in stocks for a while. But today, deposit interest rates exceed 55 percent, providing guaranteed returns. The stock market and deposit interest rates should be approached as follows. There is a risky product on one side, and a risk-free product on the other. There is a risky product that should offer at least 2.5-3 times more return than the risk-free product, so that it is worth taking the risk. If we take deposit interest rates around 60 percent as a basis, it is not possible for the stock market to provide 150 percent return in one year, but for now, deposits will be worth it. “, stands out among investment instruments. However, I think the stock market is still cheap and has a place to go for long-term investments.”