Turkey’s economy is not “fragile”, Mark Mobius, executive chairman of the Templeton Emerging Markets Group said on Wednesday.
Mobius, in an interview with Anadolu Agency, said there were great opportunities in Turkey for investors.
“I don’t agree with the ‘fragile five’ thesis since it simplifies the very complex economic structure of those five countries and in Turkey’s case, it denigrates the very real strengths of the economy,” he said.
The “fragile five” concept was created by analysts at Morgan Stanley in 2013. It groups Turkey, Mexico, Brazil, Indonesia and South Africa as emerging markets under particular economic pressure.
Mobius said Turkey’s economy is “very vibrant, with a well-trained and educated workforce” as well as “excellent managers, capable of entering global markets effectively. Therefore we cannot say that it is ‘fragile’.”
He also explained how the US Federal Reserve’s projected interest rate increase will affect emerging markets.
“The perception of risk is rather low since the idea of an interest rate hike has already been discounted by the market. The expectation is that, if a rate hike comes, it will be small. The real risk comes if the interest rate hike is large, and larger than expected. In that case, all markets, including emerging markets, will be impacted. We must remember that the impact of interest rate rises is just one of the variables that impact markets, and it is important to note that, in the past, in many cases, markets actually rose in the face of higher interest rates because of other extenuating circumstances,” he said.
“The dollar pressure will now be reduced since the amount of depreciation of several emerging market currencies has gone too far so that many of the currencies are severely undervalued on the price parity basis,” Mobius explained. “We must remember also that the US government does not want a dollar that is too strong, since that will harm its own economy. The challenge facing the US Federal Reserve is how to raise interest rates in the face of falling interest rates in Europe, Japan and China.”
