Trump is a gift that keeps on giving and giving….to China.
President Erdogan is not going to bend over for the Americans and we know what America does when some country does not bend over to them.
They bomb them (Iraq, Libya, Afghanistan, Syria, Lebanon, Argentina, Vietnam, Pakistan, Congo, Haiti, Yemen etc.) or try to destroy them economically (Russia, Iran, Venezuela, Zimbabwe, now Turkey etc.).
However, they cannot do the same to China directly but still Trump keeps trying and spews venom every time he tweets.
While all countries are now moving solidly towards China who does not interfere in the politics of any nation, bar none, under any circumstance. Regime change and bombing is not the way China works.
While all countries are now moving solidly towards China who does not interfere in the politics of any nation, bar none, under any circumstance. Regime change and bombing is not the way China works.
Trump has done so much damage globally due to tariffs that it’s hurting US consumers, US manufacturers, almost all countries around the world including Canada, EU and others hence all countries (7.3 billion non-Americans) will now combine their forces and unify in order to attack America, even more so after seeing the Turkish fiasco erupt last week.
With sanctions on Russia, Russia is more tightly knit with China than ever in their history.
With collapses in Greece and Portugal, the Chinese bought their assets for pennies.
With America destroying Middle East and selling American oil assets, Middle Eastern countries are able to accept China for their oil concessions for the first time.
Trump has ratcheted up the noise on Russia, Turkey, across Middle East, Iran, Eurozone, even their closest ally Canada and Mexico with whom they have had NAFTA deal for 24 years and now Trump has gifted Turkey to China to invest/buy for pennies.
Turkey (pop. 80m) has more than USD 300b in foreign debt which is it’s biggest problem due to which the currency and bond prices have plunged. Turkey hardly has any trade with America in steel and aluminum so the market reaction is overdone. However, whoever invested in Turkey in the last few years is watching their investment values shrink by half.
We expect things to bounce back in the months ahead.
In the short term, Turkey is in trouble, their currency is plunging, some more businesses will shut, their shares will nosedive and inflation will sky rocket.
However, as soon as China will announce some real support (along with Qatar, Russia and others), prices will jump back, though not to the same level.
Russia has already indicated support by suggesting to sell US assets.
Commercial Bank of Qatar had a 71% stake in Alternatifbank since 2013 which they turned into 100% in 2016.
Similarly, Qatar National Bank bought Finansbank in Turkey from the Greeks in 2016.
Just in May 2018, Emirates NBD Bank from Dubai also bought a major stake in Denizbank from the Russians.
Qatar and UAE will need to pump billions to stabilize their banks in the weeks ahead.
Turkish domestic bond yields for 10 year bonds have plunged to more than 20% pa.
The America listed ETF of Turkey is at an ALL TIME LOW of USD 21.66.
You can see the USD Turkish Lira live price on the right hand sidebar of this column under title “Markets” and then by clicking under “Forex”.
Meanwhile, some of the biggest names of Turkey were already headed towards bankruptcy.
Singapore’s Temasek just invested USD 200m into Dogus Group owned Nusr-et steakhouse valuing 42 restaurants at an astonishing USD 1.2 billion.
This empire will surely collapse because bulk of their loans are in USD or EUR. the currency has dropped from 2 to a USD to 6.67 today.
This is what a Singapore newspaper had to say a few days ago:
Another major Turkish developer (Agaoglu) also has rumors flying around of their bankruptcy though the owner claims things are ok.
Overall, many countries and largest companies (from gold to clothing like Zara) have exposure to Turkey.
President of Turkey is not buckling down but he is doubling down indeed.
As the saying goes, do what the Turkish Govt is doing, which is unifying against America.
It may be time to buy Turkish bonds in domestic currency (yielding 20% pa) and/or their ETF if you believe that China will support Turkey in the months ahead.
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