Saturday, May 8, 2010

EconNews Roundup

Lira as safe haven according to some analysts: Well well well... When the lira depreciated 5% in a couple of days, this piece sounds kinda funny, but don't forget that lira has performed better than peers in CEE since the beginning of the year. And there are are some compelling reasons for the lira to be a safe haven, or at least not be hurt as much as most of its peers. Actually, the article would have been more informative if it spent more time explaining those reasons, some of which are mentioned at the end. But before you go long-lira, note that fundamentals such as external financing or the fair value if the lira do not justify more real appreciation no matter how hard you try. Also remember that a lot of analysts are simply (and implicitly) assuming mean reversion when they are bullish on the lira: Since lira has underperformed in the recovery, it will perform better from now on. While the events of the last few days have justified them so far, lira's unique characteristics, such as huge FX deposit base, may mean that the Turkish currency has simply less volatile than its peers- keep in mind that I am just thinking aloud, it is way too late to look at Sharpe ratios or implied volatility without a Bloomberg terminal.

Notes from the IPO Turkey Summit: I think it'd be a good idea to discuss why IPOs are so low in Turkey (hint: demand and supply factors both play role). And if you want to get confused on the eternal chicken-or-the-egg dilemma, see here.

A better way to create jobs (than force firms to hire workers, a la RTE)

The foreign interest in malls seems to have died down, but the sector is yet recovering.

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