Before delving into the year 2024, it's essential to discuss the year 2023. Indeed, 2023 posed more challenges for Türkiye compared to previous years.
The most significant challenge was, of course, the earthquake; it directly affected 11 provinces and indirectly impacted various others. The lives lost and the children left orphaned will continue to be the primary cause of our heartache. Additionally, the aftermath included a financial burden exceeding 100 billion dollars, marking a new era for the Turkish economy. The budgets for many years to come will bear the cost of this destruction and the financial burden of the resources provided.
If we are to find a positive aspect amid such a great tragedy and devastation, it is the increased preparedness of Istanbul and the Marmara Region against such destruction. According to the process led by Vice President Cevdet Yılmaz, a decision has been made strategically to shift low-value-added production in Istanbul and its surrounding areas to other regions. Efforts are being made to find solutions, especially in logistics, manpower, site selection, water resources, and, most importantly, financing.
The strategy involves relocating industries in Istanbul and its vicinity, concentrating them in the region between Ankara and Mersin, where the earthquake risk is relatively low. The existence of railway transportation and the proximity to Ankara, thanks to the investment in high-speed train infrastructure, are among the factors influencing the choice of this region.
Within this strategy, industrial zones (OSBs) will play a crucial role in establishing a more organized and efficient industry. There will no longer be the illogical placement of factories scattered among fields, creating a more orderly and productive industrial landscape.
The general elections of 2023 were conducted under the shadow of the earthquake's grim aftermath. These elections, critical and stressful, culminated in Erdogan's victory, preserving the financial stress and resulting in a significant shift in the opposition.
Unfortunately, the initial impression suggests that the incoming might not surpass the outgoing. Having a national opposition is as crucial and necessary for Türkiye as having its oil. Although we discovered oil in Gabar and gas in the Black Sea, and our hopes blossomed, there is no progress in the opposition, and they even hesitate to condemn terrorism. We couldn't find a national opposition.
Let's take a look at some topics related to the year 2024:
Stock Market
According to economic principles, when interest rates rise, a decline in the stock market is expected. We have been experiencing this for the past couple of weeks. However, the rapid decrease in Türkiye's CDS score and its continuous decline, positive trends in credit ratings, and expectations of further increases indicate the potential for the stock market to offer gains in 2024. Particularly, stock investment, which stands against interest rate increases, has the potential to provide returns equivalent to inflation between January 1 and December 31. Our stock market is not expensive despite everything. Of course, the critical point is making the right stock selection. An increase in foreign investments will increase interest in BIST100 companies.
TRY-Foreign Currency
We have entered a period in which the attractiveness of TRY deposits will be maintained throughout 2024. It seems that foreign currency investors will lose this year. For the first time in a long while, we can say clearly that if the Central Bank of the Republic of Türkiye (TCMB) does not buy excess foreign currency from the market, a decrease in the exchange rate is possible. However, I believe that interest rate cuts will come in the second half of the year. The course of inflation in the first half will determine the timing and pace of interest rate cuts. September will be the period when we start talking about and implementing interest rate cuts. At this point, the stock market may accelerate upward with the reverse effect.
Gold
Every decrease in US interest rates has a positive impact on gold. Therefore, gold investment may be relatively secure. Although inflation risk in the US has not completely disappeared, a clear picture will emerge with January 2024 data, in my opinion. In this regard, it would be beneficial for gold investors to invest in funds or gold accounts rather than physical gold, which carries a lot of risk.
Minimum Wage
With a significant increase of 49%, the minimum wage was announced as 17,002 TRY. This aligns with the calculation logic we published in our column a couple of weeks ago. According to this, employers will struggle in the first six months, and minimum wage earners will feel prosperity, while in the second half of the year, employers will relax, and it will be a challenging period for workers. However, regardless of the outcome, whatever is needed, if necessary, President Erdogan will not hesitate to take a conscientious step, let's note that here.
