Capital inflows into Türkiye have resumed, in line with trends across other emerging markets, following a partial easing of tariff uncertainty linked to former U.S. President Donald Trump.
Declining domestic inflation and recent interest rate cuts by the Central Bank have further encouraged foreign investor interest.
According to Central Bank data, foreign investors have been buying Turkish equities for seven consecutive weeks, purchasing over $1.2 billion worth of shares in just six weeks, while bond markets have experienced net outflows.
The rise in risk perception regarding bond yields has shifted investor preferences toward equities. After nine straight weeks of stock purchases, investors briefly sold shares in mid-June but quickly resumed buying.
Weekly net equity purchases amounted to $248 million on June 27, $235 million on July 4, $178.3 million on July 11, $209 million on July 18, and $205 million on July 25. Although purchases slowed to $135.5 million on Aug. 1 and $78 million on Aug. 8, the overall buying trend continued.
On the bond side, foreign investors made a $106 million net purchase in the week ending July 25, followed by net sales of $47 million and $32 million in the first two weeks of August. Analysts note that the sustainability of this equity-buying trend will become clearer in September.
Presenting the Central Bank’s quarterly inflation report on Aug. 17, Governor Fatih Karahan highlighted the increased risk perception around bond yields and the ongoing shift in portfolio allocations toward equities.
Capital inflows into Türkiye have continued since May, with gross reserves rising from $124 billion in March to $174 billion by early August. Net reserves excluding swaps increased to $50 billion.
Experts attribute sustained foreign equity purchases to easing inflation and lower interest rates. However, they caution that the permanence of inflows will also depend on domestic political developments, including the main opposition CHP’s congress lawsuit scheduled for September.