Turkey’s corporate sector has been able to weather the economic turmoil well, investment bank Jefferies said in a recent report that suggests it is in much better shape to handle any adjustment to shocks.
Turkey has defied the pessimistic consequences of financial markets over the past five years despite its balance of payments disparities, he said, adding that the country’s stock market has outperformed its emerging market peers in US dollars since. the start of the year despite rising fuel costs and a strong dollar.
“The index itself has stagnated in US dollar terms for the past five years, baffling skeptics who had felt the economy was lagging behind a balance of payments crisis. Türkiye seemed to always sidestep” the inevitable adjustment.
The top 20 listed companies have demonstrated substantial improvement in return on equity (ROE) since 2015, and although they have increased debt ratios, net profit margins have increased despite mixed asset turnover, noted the Jefferies analysts.
“The net debt-to-equity ratio was comfortable overall,” they said. “Ultimately, with the CDS widening to 2008 levels, another test of currency resistance is emerging. Now may not be the time to dip your finger into it investing, but Turkish companies have not only shown adaptability, but also a survival bias.
Turkish companies are “very flexible” and local business decision-making mechanisms work quickly, said Çetin Tecdecioğlu of the Turkish Exporters Assembly (TİM).
“It means that Turkish businesses grow or shrink very quickly, which is a distinguishing feature,” he said, adding that the key to overcoming economic challenges is access to finance.
Tecdecioğlu pointed out that the risk of stagnation in the global economy is looming. “Next year, it is more likely that companies will reduce capacity and may not be very profitable. But companies and their leaders seem ready to meet these challenges, provided they have access to finance,” he said.