Turkey faces threat of MSCI downgrade to ‘frontier’ market

Turkey seems to be on a loose soil as far its economic ties are concerned. Following a series of measures taken by the country’s authorities, it could be demoted to “frontier” status by MSCI, one of the world’s most important providers of indices.

According to sources, MSCI had announced that it would be conducting a review towards the end of June regarding the status that Turkey holds as a member of the emerging market index. The status revision would take place if the indices benchmark organization analyses the condition to worsen.

To put things in perspective, Turkey’s standing on the MSCI index has taken a hit in the last few years. This could be a result of the falling Lira (Turkish currency) against the US Dollar. And due to this, the country stands in the brink of being demoted to the position of the ‘Frontier market’, which puts it in the league of Morocco and Vietnam.

Commenting on this news, Emre Akcakmak, who is the portfolio manager of East Capital, said that the move might cause Turkey to lose around $5 billion worth of equity, which also includes $2-$3 billion in passive investments. He went on to say that this could be a loss of prestige for the country.

Going in-depth in the news, MSCI said that this decision has been taken after the country has implemented multiple bans on various short selling and stock-lending. However, according to the local authorities of Turkey, all the strict measures were taken to curb the manipulation of the financial market of the country.

However, Mr. Akcakmak even mentioned that the chances of demoting Turkey’s status could be slim as it could just be a gentle warning from MSCI. However, if the local authorities in the country continue to have such radical reforms, the indices benchmark organization could step in and revise the status.

Turkey’s Lira has witnessed plummet in the last half a decade or so. From around 2.5 Lira against 1 US Dollar in 2015, the Turkish currency lags at just under 7 Lira against a dollar in June 2020.





Other news

Most Recent Blogs View All Blogs

04 May

Difference Between Standby LC And Letter Of Credit

Both letter of credit and Standby letters of credit are the most popular and commonly used trade fin...

03 May

Effective Payment Methods In Global Import/Export Trade Finance

Timely, secured, and sufficient payments are one of the main pillars of operating a profitable inter...

26 Apr

Proven Ways To Reduce Payment Risk In Foreign Trade

Being an international businessman, you cannot deny the possibility of finding yourself at the highe...

Disclaimer

Emerio Banque is an innovative global financial institution incorporated in England and Wales with Legal Entity Identifier 875500DGPPWAFABBK130. Emerio Banque does not offer its products and services to businesses and/or persons registered in the United Kingdom.

No information on this website should be construed as a solicitation, offer, recommendation, and representation of suitability or endorsement of any security, investment or strategy.

Important Notice

Emerio Banque would like to advise its customers to report any suspicions which they may have regarding the identity of any intermediary who promotes products or services offered by us or any intermediary bearing similar names. You should verify with Emerio Banque by calling our Customer Service Number on +44 203 059 7831 or emailing help@emeriobanque.com

Please also be aware of bogus SMS messages and voice message calls or fraudsters who impersonate the staff of Emerio Banque.

We have recently become aware of a number of entities with different names misrepresenting themselves as associates, partners or agents of Emerio Banque.

Please be informed that Emerio Banque is not associated with nor do we have any business connections or dealings with such institutions.

Emerio Banque takes all information regarding suspicious fraudulent activity very seriously. Please immediately inform us at compliance@emeriobanque.com if you suspect or are approached by persons misrepresenting or impersonating Emerio Banque and/or its officials. We will make investigations and will take legal action where necessary.