Moody’s: Thailand Among Most Resilient Emerging Markets, Türkiye Ranked Most Vulnerable

Moody’s Ratings has identified Thailand as one of the world’s most resilient emerging-market economies, citing strong policy reforms and macroeconomic buffers that helped countries withstand recent global shocks. In contrast, Türkiye was grouped among the most vulnerable economies due to persistent inflation, policy constraints, and external financing risks. Despite that assessment, global asset manager BlackRock remains optimistic on Turkish bonds, arguing that attractive yields and a weaker US dollar could continue to support emerging-market debt.

Moody’s Ratings has named Thailand among the strongest emerging-market economies capable of withstanding global financial shocks, while placing Türkiye among the most vulnerable markets due to inflation pressures and external risks.

In its latest analytical report, Moody’s said several major emerging economies have become more resilient over the past five years despite facing the Covid-19 crisis, aggressive global monetary tightening, banking-sector stress, and rising geopolitical tensions.

Thailand Among the Best Performers

According to Moody’s, Thailand joined Malaysia, India, Indonesia, and Mexico in the agency’s highest resilience category.

The report said these economies benefited from years of early policy reforms, including:

• Inflation-targeting frameworks,
• Flexible exchange-rate regimes,
• Improved debt management,
• Development of local-currency capital markets.

These measures helped the countries absorb economic shocks through market mechanisms without triggering broader funding or credit crises.

Moody’s noted that although emerging markets continued to experience volatility in exchange rates and bond yields due to global interest-rate cycles, investor confidence in policy credibility remained relatively intact.

Türkiye, Argentina and Nigeria Listed as Vulnerable

In contrast, Türkiye, Argentina, and Nigeria were categorized among the most vulnerable emerging economies.

Moody’s pointed to:

• Persistent inflation,
• Policy limitations,
• External financing vulnerabilities,
• Market pressure on currencies and sovereign debt

as key factors weakening resilience.

The agency said these economies remain more exposed to shifts in global liquidity conditions and geopolitical uncertainty.

BlackRock Still Positive on Turkish Bonds

Despite Moody’s cautious stance, BlackRock expressed optimism toward emerging-market debt, including Turkish bonds.

Michel Aubenas, BlackRock’s head of emerging-market debt, said he expects another solid year for returns as the weaker US dollar improves financing conditions across developing economies.

According to Aubenas:

• Dollar- and euro-denominated emerging-market debt could deliver “mid-to-high single-digit” returns,
• Local-currency debt could generate “high single-digit to low double-digit” returns.

He argued that yields remain historically attractive while many European investors are still underexposed to the asset class.

“There is plenty of pent-up demand,” Aubenas said in an interview.

“With the Fed on hold, it is no longer a source of higher rates, which supports emerging-market assets.”

BlackRock ETF Includes Turkish Debt

Last month, BlackRock launched a new actively managed ETF focused on emerging-market sovereign debt.

The fund’s top holdings reportedly include government bonds from:

• Mexico,
• Hungary,
• Argentina,
• Türkiye.

Although emerging-market returns have remained modest this year due to investor caution following the Iran war, BlackRock believes the asset class still offers significant opportunities.

According to Bloomberg indexes:

• Hard-currency emerging-market debt has returned 1.3% this year after an 11% gain last year,
• Local-currency bonds gained 1.2% after returning 9% in 2025.

Aubenas noted that future gains are unlikely to come from a single trade or theme, emphasizing the importance of selective positioning.

Foreign Investors Pull Back From Turkish Assets

Meanwhile, recent data from Central Bank of the Republic of Türkiye showed foreign investors reduced their exposure to Turkish markets during the final week of April.

According to weekly securities statistics:

• Foreign investors sold a net $228.4 million in Turkish equities,
• Net outflows from Turkish government bonds reached $282.1 million.

Combined, total portfolio outflows reached approximately $510 million for the week ending April 30.

The reversal ended a three-week streak of foreign inflows into Turkish markets.

Market analysts said the shift likely reflected a combination of profit-taking and changing global risk sentiment amid rising geopolitical uncertainty.

Markets Watching Policy Credibility

The contrasting assessments highlight a broader debate over emerging-market resilience in a period marked by geopolitical fragmentation, higher energy prices, and slowing global growth.

For Türkiye, international investors remain focused on:

• Inflation dynamics,
• The credibility of economic policy,
• Foreign reserve trends,
• Fiscal discipline,
• External financing conditions.

While some global investors continue to view Turkish assets as attractive due to high yields and valuation opportunities, rating agencies remain cautious about the country’s structural vulnerabilities.

The divergence between Moody’s assessment and BlackRock’s investment positioning underscores how emerging markets are increasingly being judged through both macroeconomic stability and geopolitical risk.

The first test for Turkish financial  markets is the year’s second Inflation Report presentation by Fatih Karahan on 14 May, where counterintutively a veyr hawkish rate message could bring back global investors.

On the other hand, from a fundamental analysis view point, stocks don’t offer USD value, with  concensus 12-mth ahead BIST-100 target is only 17K points, or only 20% upside potential.

Bloomberg, Moody’s, PATurkey newsdesk

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