Buy Turkish Banks?

Turkish President Erdogan fires three more Central Bank governors overnight.

He fired the Central Bank Governor in March 2021.

Erdogan wants interest rates. These three guys express a bias for higher interest rates.

So here is the trade;

Sell USD / Buy Turkish Lira (its the cheapest it has been forever).

choice # 1 – buy a bank term deposit for 13%-15%

choice # 2 – buy Turkish 10 year government bond which are yielding 18% p.a.

or choice # 3 – buy shares in one (or a few) of the top 5 banks in Turkey.

IS Bank for instance, is the oldest and 2nd largest in terms of assets.
Its equity has a market capitalisation of equiv. US$2.5 billion, trailing P/E ratio is 3 times, forward P/E estimates is 2.3 times and its Price to Book ratio is 0.35.

The latter is probably safer than an Australian mining exploration stock.

October 14, 2021
by Rob Zdravevski

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