August 16, 2018 / 2:31 PM / a month ago

Turkey's Albayrak tells investors the country will emerge stronger

LONDON (Reuters) - Turkish Finance Minister Berat Albayrak hosted a conference call with global investors on Thursday in a bid to reassure them that policymakers are able to tackle the worst currency crisis the country has suffered since 2001.

FILE PHOTO: Turkish Treasury and Finance Minister Berat Albayrak speaks during a presentation to announce his economic policy in Istanbul, Turkey August 10, 2018. REUTERS/Murad Sezer/File Photo

Some 3,000 investors and economists had registered for the call. Below are reactions from fund managers and analysts who listened to the call:

SAILESH LAD, AXA INVESTMENT MANAGERS

“He was very orthodox in what he said, he said all the right things, but it’s one thing saying them and another thing doing them. He talked about a plan to address these issues, but we need to see the details behind that. His comments were pre-written and the questions were chosen out of a long list, so the answers were prepared as well.”

“He did mention a couple of things that were important - he said capital controls weren’t part of the agenda, and never will be. I think a lot of the market liked hearing that. He talked about standing by public banks - what that means, we’ll see. He said that credit ratings would improve in the medium term because of the macro framework they’ll put in place, there will be no compromise on fiscal discipline, and there will be a credible action plan to support Turkey.”

CRISTIANA DE ALESSI, BNP PARIBAS ASSET MANAGEMENT

“The finance minister provided some comfort by acknowledging that rebalancing the economy is a priority through both fiscal and monetary policy and that capital controls aren’t an option.”

“The MTP (medium term programme) released in September will be key to see what concrete steps will be taken to turn this into sustained action. It will also provide a benchmark to measure the new government’s progress. My main concern is a lack of contingency plan if debt cannot be rolled over or if a slower growth rate exacerbates corporate NPLs. Turkey may require a stronger adjustment than is currently in their plans.”

RICHARD SEGAL, MANULIFE

“My overall impression is that he showed enough commitment for sentiment and especially the FX markets to sustain recent gains, and perhaps build on them somewhat. He highlighted that the country has a strong track record of crisis management and that the key has been sound fiscal policy and it will be this time also.”

“He would not be drawn on monetary policy, and while he was forceful in stating that monetary policy alone could not restore single digit inflation again, he refrained from talking about interest rates. The president and his advisors only allow the central bank to raise them under duress, and time will tell whether more central bank independence will be permitted in the future.”

“In sum, investors trust his commitment above all to: 1) rebalancing – the key being a ‘more modest’ growth target; 2) single digit inflation and large and growing primary surpluses, but other sources of finances – eg, Qatar. The quest is now how to achieve all of this.”

CLAUDIA CALICH, M&G

“Considering this was his first call with investors, it went okay in that he didn’t demonise investors or use an antagonistic tone, versus Erdogan’s for example, that there is an economic war against the country. That he didn’t allude to, which is a small positive, but having said that there were still important details that were not addressed.”

“He touched on some of the key issues such as the macro rebalancing, the fiscal stance, the monetary policy stance, the banks of course, and the corporate debt and asset quality. But in terms of exactly how this is going to play out, I think more details are needed.”

ABISHEK KUMAR, STATE STREET

“What was really assuring and which he stressed in a number of different ways, was that capital controls will never be on Turkey’s agenda, which was the biggest issue for investors as capital controls would not just have impact on EM investors in Turkey but also have repercussions for European investors - because like it or not this is one country that was being considered for inclusion into the EU.”

GULAY GIRGIN, SEKERBANK

“In general, I found it successful as the rhetoric suggests that they are aware of the problems in Turkey’s economy and reasonable solutions are being prepared. It’s very valuable that they underlined the negative effects of inflation on the economy and the target of single digit inflation was emphasized.”

“I also find the sustainable growth goal important. The importance of fiscal discipline was stressed. In a nutshell, it shows that problems of the economy can be discussed with investors and confidence can be restored.”

Compiled by Karin Strohecker, Claire Milhench and Marc Jones in London, Ece Toksabay in Ankara; Editing by Toby Chopra and David Stamp

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