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Insights on the Recent Trends in Turkish Investment Ecosystem

Turkey has been experiencing a rapid economic growth in recent years and investing in Turkey can be divided into to two sections in terms of direct investments and portfolio investments as in the rest of the world.

In terms of direct investment, start-up ecosystem has been growing alongside it. The country has a young and highly educated population, which is a key factor in driving innovation and entrepreneurship. Additionally, the government has been making significant investments in the technology sector, further fueling the growth of the start-up ecosystem.The Turkish government has been investing heavily in the technology sector, including software development and engineering, which has created a favorable environment for technology startups to flourish. The technology sector in Turkey is particularly strong in areas such as mobile technology, cloud computing, and big data. This presents a significant opportunity for investors to invest in technology startups, as well as companies that operate in the technology industry. Especially considering the strength of SaaS (Service as a Software) and SaaP (Service as a Product) in recent periods, I think that there should be a slot for tech-industry in the basket of investors.

Moreover, the otherfield that is gaining momentum in Turkey is the renewable energy sector. Turkey has set a target to increase the share of renewable energy in its total energy consumption by 2023, so the renewable energy sector is a potential area for investment. The government has been providing incentives for companies to invest in the renewable energy sector.Considering Europe's new renewable energy regulations and the obligations it imposes on business operators, I predict that a lot of goods and services will be purchased from Turkey in the coming years. In the scope of direct investment, particularly, the rise in the value of foreign currencies and the fall in the value of the Turkish Lira are important factors in lowering the cost of establishing the infrastructure required for investments, including all forms of production.

On the other hand, I think the Turkish stock market also needs to be examined as a portfolio investment. Turkey's stock market, known as the Borsa Istanbul (BIST), has been performing well in recent years and has the potential to be a good investment opportunity. Its annual average return higher than the average return of many other emerging market stock indices. Additionally, the BIST has a relatively low correlation to other global stock markets, which can provide diversification benefits for investors.

However, as with any investment, it is important to consider the risks. Turkey's economy and stock market have been affected by several factors such as high inflation, currency fluctuations and political instability. Therefore, before investing in the Turkish stock market, it's important to conduct thorough research and due diligence and consider the potential risks involved. Thus, it is advisable to diversify the investments across different sectors and companies, as well as across different geographies to mitigate the risk. From this point of view, it is safer to think about investments in the long term and invest in companies competing with the world in its sector. As of January 2023, companies are active in hydrogen market which will be valued in the future or white-shoe holdings that increase their assets seem more convenient to park your money. It should not be forgotten that Turkey is in an election year. There will be fluctuations in economic markets until the end of 2023 at the earliest.

In summary, Turkey’s rapidly growing start-up ecosystem and indirect investment options provide good chance to profit for investors. Considering that the BIST is still cheap based on the foreign currency and considering the incentives provided for foreign direct investments in various sectors, it can be said that the opportunities offered by Turkey continue.




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