Investors take refuge in the interest on deposits

Before the election, the main lines on the direction of savings began to emerge. With six weeks to go before the 28th term presidential and parliamentary elections, savers are trying to find a way to keep their money safe. In a period of uncertainty, investors are more cautious when trading. Therefore, with the tendency to stay away from risk, investors are turning to no-trade alternatives. In 2022, the stock market, which is the safe haven of investors, left with no alternative in the environment of deeply negative real interest rate and suppressed exchange rate, cannot hold its throne any longer in the electoral atmosphere. .

EXPECTED INCREASE IN EXCHANGE

Selling pressure in the stock market has caused sharp pullbacks with volume contracting since March 19. Although analysts point out that the volatility in the stock market will continue until the elections, investors are turning to alternatives such as TL deposits, gold or currencies because they are trading below the psychological limit of 5 thousand points. TL deposits, which have reached their 20-year peak with an average annual rate of 28 percent, and in some cases an annual return of 35 percent, are candidates to be the safe haven for investors who want to protect themselves from risk in these days when the electoral marathon begins. On the other hand, there was an expectation that exchange rates would rise rapidly after the elections. Especially in the last week, we have seen that investors’ expectation of an increase in the exchange rate has increased and the demand for foreign exchange has accelerated, putting pressure on the exchange rate. The dollar began to move around 19.20 liras and the euro 20.70 liras. For investors who don’t want to take the risk of currencies, such as the stock market, another direction where money goes is currency protected deposit accounts. Exchange rates suppressed by public control reduced the attractiveness of the KKM product. However, KKM accounts have been continuously increasing for 11 weeks.

INCREASE IN INTEREST INCOME

The government, which did not want an increase in exchange rates until the elections, opened up interest rates on the KKM to competition from banks. At the same time, the 3-month expiration limit has been removed. So the goal is for investors who don’t want to tie up their pre-election savings for a long time to turn to KKM. Bankers estimate that with the removal of the upper limit on interest rates, interest yields in the range of 20-24 percent may occur at KKM. It is stated that with the increase in interest rates in KKM, the deposit interest of TL may also increase. Therefore, it is estimated that investor orientation towards short-term TL deposits and KKM can be accelerated.

New records may come

Gold, the favorite investment tool of investors in Turkey, is also in demand ahead of the elections. With the expectation that the banking crisis in the US and the interest rate hikes by the US Federal Reserve (Fed) are coming to an end, the ounce of gold was quoted just below 2,000 dollars, while the gram of gold rose to its all-time high of 1,242 liras. Experts believe that if the historical peak of $2,075 per ounce is exceeded, the rise may accelerate and new records may be broken on the gram side with the effect of the rise in the dollar exchange rate.

‘The most risk-free investment 35-day TL deposit’

Lord Babushcu

Ziraat Bank, former deputy general manager, academic Prof. Dr. Şenol Babuşcu said that volatility may increase in Borsa İstanbul, especially 15 days before the elections, as clues about the election result began to become clear in the polls. Babuşcu said: “They will do everything possible to keep the dollar exchange rate at the current level until the elections or not to exceed 20 TL, so I don’t think there will be a rise in the dollar. For now, the best investment tool until the elections seems to be a short-term 35-day TL deposit.” Noting that since September 2021, when the Turkish economic model began to be implemented, the interest rate on deposits has reached the highest level and the interest rate on business loans has reached the lowest level, experienced banker Babushcu He stated that the economic model that began with low interest rates has collapsed and damaged the banking system.

‘Opportunities in the stock market after the elections’

emre okten

Ata Investment Domestic Markets investment adviser Emre Ökten said that upward movements in the stock market can be expected after the second quarter of the year, when election uncertainties fade in the medium term and balance sheet effects come into play. solid. Ökten said: “After the electoral process, the uncertainty will end and foreign investors will start investing in the stock market, which will accelerate the bullish momentum. While the risks are high in the short term, there may be opportunities on the stock market side in the medium to long term.