Foreign investors show interest in Turkish economy after years of instability

Scores of foreign investors are returning to Istanbul and Ankara after years in the cold for a flurry of meetings to understand whether Turkish elections could bring a tidal change for its economy and financial markets.

According to several investors and bankers involved, large foreign lenders including BBVA (BBVA.MC) and BNP Paribas (BNPP.PA) organised trips and calls for clients to meet current Turkish policymakers and opposition officials and advisers.

President Tayyip Erdogan’s unorthodox policy approach, including aggressive rate cuts in the face of soaring inflation, left the economy and markets heavily state-managed and spurred an exodus of foreign investors over the last five years.

But after a two-decade reign, Erdogan and his ruling alliance are trailing in some polls ahead of the May 14 vote to an opposition that has pledged to ditch his policies and return to orthodoxy in the big emerging market economy.

The investor visits and conference calls have ramped up in recent weeks and will continue through April, garnering far more interest than in years past including before the COVID-19 pandemic halted much travel, the sources said.

One person familiar with the plans said a trip next week organised by Spanish lender BBVA includes clients representing some $1.5 trillion in debt-related assets across emerging markets.

“There is a jumbo-sized interest rate hike potentially coming in a relatively short period” if the opposition wins, the person said. Investors seek to understand “who will win, who will hold key positions and what the programme will be.”

BBVA, majority owner of Turkey’s Garanti Bank (GARAN.IS), declined to comment. French lender BNP, a big stakeholder in local lender TEB, said it would host its meetings next month.