Friday, April 30, 2010

Reader Request: Of Politics and IPOs

A reader, who is working for an M&A tracker company, recently asked me the following question:
Can you give me a quote for a piece I'm writing? I need your thoughts on all the upcoming IPOs happening potentially in the middle of a referendum season.
Honestly, I had not given the issue much thought, as I am not into equities, although I knew that there are quite a bit of IPOs coming. But now that I think about it, I don't see this as a big problem at all. My optimism will come as a surprise to my loyal readers who know me as the perennial pessimist, but the major force driving equities in Turkey is foreigners, as the graph below clearly illustrates:

With emerging market flows strong, EEMEA getting a good chunk of the recent flows and within EEMEA Turkey seen as a star performer, as I mentioned in my last Hurriyet column, the mood is definitely Turkey-positive. And as a political analyst whose opinion I value a lot recently noted in a research note, foreigners have yet to grasp that the referendum is a winner-take-all battle for AKP and anti-AKP (CHP-MHP, secular establishment, etc...) And as long as EM->EEMEA->Turkey sentiment continue to stay positive, those IPOs may be over accident-free.

I don't want to misrepresent my thoughts: I do think that sooner or later foreign investors will catch up to the political reality as well. But I do think that it will be later rather than sooner and only after a major event that will be the breaking point of all the pressures building up. But until then, enjoy the ride...

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