Atilla Yesilada: 2026 Investment Outlook: Navigating Global Shocks and Turkey’s High-Growth Themes

The Method to My Madness: Seeing the Big Picture

As we settle into the mid-autumn of 2025, it’s time to start sketching the landscape for 2026. My approach has always been the same: before getting lost in the weeds of specific stocks, I try to paint the broadest canvas possible—the macroeconomic and geopolitical environment—to understand the risks and opportunities that will truly shape capital flows. For those building long-term savings, or for corporate clients planning international strategy, 2026 presents a complicated picture that requires highly selective engagement.

Global Forecast: Stability with a Financial Storm Warning

Based on the latest projections from institutions like the IMF, the OECD, and the World Bank, the global economy in 2026 is expected to look remarkably similar to 2025. We anticipate solid growth around 3%, respectable but still short of full global capacity. Inflation will be geographically diverse: rising somewhat in the United States, declining in most other developed economies, and continuing to create deflationary pressure in China.

Crucially, I do not foresee a major global financial crisis originating from emerging markets (EMs). The global financial system is working efficiently, and there is robust international demand not just for EM equities, but even for local-currency bonds.

However, I maintain a strong belief that the United States financial market is heading for a significant, sharp shock. This won’t be a replay of the 2007-2008 systemic crisis that seeped into the real economy. Instead, I foresee a 1987 “Black Monday” scenario—a severe, short-lived correction confined to Wall Street that does not compromise the banking system or the function of financial intermediaries. History suggests that in such cases, markets typically recover within a year.

The Two Causes of Inevitable US Correction

Why am I so certain about this financial shock? The reasons are a mix of technological exuberance and political volatility.

First, there is now a broad consensus that the Artificial Intelligence (AI) sector is forming a massive bubble. This bubble is evident both in the astronomical valuations of public companies and in the equally staggering capital commitments being bandied about by private players. The market is pricing in perfect execution and limitless profitability—a scenario that rarely plays out smoothly. Financial markets are notorious for pricing in all bad news in a single session, rather than allowing expectations to deflate gradually.

Second, the political environment, particularly around the November 2026 US midterms, will remain a source of global shock. The continued legal maneuvering and unexpected decisions emanating from the Trump camp will fuel uncertainty. I expect the pressure on the US Dollar to continue, which will push US Treasury yields higher. Furthermore, despite market desires, the Federal Reserve will likely have limited room for rate cuts—perhaps only three 25 basis point reductions spread across 2025 and 2026—as I believe inflation in the US will prove stubborn. Geopolitical instability, with continued trade wars and the unresolved conflict in Eastern Europe, only adds to the risk premium.

Global Themes for the Smart Investor

In this bifurcated world—stable real economy, volatile financial markets—where should investors focus their attention?

The focus must shift away from the over-priced AI producers and towards those who are enabling AI’s growth or capitalizing on structural weakness:

1. Energy Producers: The sheer energy demands of AI infrastructure are astronomical. Companies that can provide reliable, cheap, and abundant power will be invaluable assets.
2. Traditional Banks: I foresee significant cracks, and eventually defaults, emerging in the unregulated “shadow banking” sector. This volatility will drive interest back to well-capitalized, established, and regulated commercial banks, boosting their appeal and profitability.
3. Industrial Productivity: Forget the hype of fintech. The true winners of the AI revolution will be old-school industrial and manufacturing companies that successfully leverage AI to optimize their production, dramatically increase efficiency, lower costs, and enhance product quality.
4. Cryptocurrency: While the time for gold to deliver extraordinary returns may have passed (I predict dollar-based gains of perhaps 10-15%), the major cryptocurrencies are set for a strong run. After recent selling pressure, I anticipate Bitcoin, Ethereum, and Ripple, backed by robust technology, will post significantly higher returns.

Turkey’s Macro Frame: Strong Lira, Tight Ship

For the Turkish economy, 2026 will not bring spectacular change. Growth will remain constrained, and job opportunities limited. Inflation will likely fall further, and critically, I advise against betting on dollar-denominated assets. The Turkish Lira will remain strong against the dollar, driven by the government’s orthodox economic policy, meaning those holding hard currency will struggle to generate returns.

The biggest hurdle for international capital remains political tension—the relentless feud between the ruling party and the opposition. This domestic political risk has previously deterred large foreign investments. However, if international investors observe that Minister Mehmet Şimşek remains firmly in charge, maintaining orthodox monetary policy, and if they recognize that a strong Lira is the best policy hedge against political risk, investment flows should pick up somewhat.

Turkey’s Four High-Reward Investment Themes

Despite the constrained macro environment, Turkey harbors four powerful, structurally-driven investment themes that I believe will generate high returns in 2026:

1. The Reconstruction Boom: Syria and Gaza

The political winds are changing rapidly in the region. Recent consensus among the US and Turkish governments on establishing a strong central government in Syria, coupled with the potential lifting of US sanctions, opens a massive economic pipeline. The estimated cost for Syria’s reconstruction alone is between $300 billion and $450 billion, with Gaza adding a further $70 billion to the total regional pie.

While this process will span a decade, Turkey is strategically positioned to capture the lion’s share of contracts. Even a conservative 25% share of the estimated annual expenditure would equate to an export increase of over $12.5 billion, significantly boosting our national export capacity. This massive demand will translate directly into phenomenal gains for companies producing cement, iron and steel, and all associated construction inputs. Furthermore, as regional incomes rise, demand for Turkish consumer goods will increase.

2. Social Housing and Construction Supply

The domestic promise by President Erdoğan to construct and deliver 500,000 social housing units is an immense and reliable growth driver. Although I find a three-year timeline (around 160,000 to 170,000 units annually) more feasible than the promised two, this commitment will reinvigorate the entire construction supply chain. The 27 distinct ancillary industries that feed the construction sector—from piping to insulation—will be the prime beneficiaries of both the social housing mandate and the regional reconstruction demand.

Here, however, I must offer a strong caution: I do not recommend buying residential property for investment. The mass influx of social housing will first drive down rental prices. This will likely push current landlords to sell their investment units, subsequently depressing overall housing prices.

3. Rare Earth Elements (REE) and Defense Industry

Two other high-technology sectors warrant close attention:

Turkey has confirmed a large, economically viable reserve of Rare Earth Elements, the core input for almost all modern high-tech industries. The key milestone we await is quality certification from a globally recognized body, like the Australasian Institute of Mining and Metallurgy. Once certified, I expect massive international interest in the sector. I believe the state-owned entity currently developing this resource, Eti Madencilik, may be brought to an Initial Public Offering (IPO) to secure capital, offering the public a historic chance to own a stake in a potentially transformative national resource.

Separately, the Turkish Defense Industry is poised for exponential export growth. With European nations increasing their defense budgets, Turkish companies will either bid directly for contracts or acquire European subsidiaries to export under a local flag, bypassing political resistance. I expect all defense-related companies to significantly outperform the general market.

Conclusion: Selective Investing in a Tight Market

Ultimately, the Borsa Istanbul (BIST 100) is expected to return around 30% over the next 12 months. When compared to the expected returns from Turkish Lira deposits, this general market return is simply not attractive enough. Success in 2026 will require a highly selective strategy.

Investors must be focused on the themes I have highlighted: construction inputs, defense, and banking. Finally, keep a close watch on Venture Capital (VC) funds. Turkey is seeing a growth in professional VC management, which is increasingly offering individual investors access to the high-growth startup ecosystem through tradable fund units. Including these in a portfolio offers an excellent way to diversify risk into high-potential, future-oriented businesses.

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