Complex Made Simple

Capital inflow to Turkey drops 9.6 per cent in first half

While energy sector brought $1.27 billion, inflow in manufacturing sector was at just more than $1bn

Foreign direct investment (FDI) in Turkey fell by 9.6 per cent in the first half of the year. As the Turkish Economy Ministry announced the news, the country’s sole exchange slumped to a record low in ten months.

The country attracted $6.3 billion, down from the $7bn invested in the same period last year.

At the close of the daily session on Friday (21 August), Borsa, Istanbul’s BIST-100 index was at its lowest level. The benchmark index edged down by 884.07 points to close at 73,797.77.

With $1.27bn, the energy sector received the lion’s share of the capital inflow, while manufacturing sector brought in just over $1bn to the country.

The European Union topped the list of investors with nearly 40 per cent of total FDI coming from the region, followed by Asia with nearly 38 per cent. The region’s contribution reached nearly $1.7bn, up from $631 million in the same period last year. Russia, with $752m, emerged as the top investor in Turkey in the first six months, followed by the Netherlands and China with the respective FDI amounts of $586m and $388m.

There were 141 new foreign-funded companies established in June 2015, making a total of 44,245 companies with international capital operating in Turkey. German capital funded 6,238 companies, while UK investors financed 2,830, according to a Reuters report.

Turkey attracted a total of S12.5bn of FDI in 2014, ranking 22nd in the world and 1st among West Asian countries according to the United Nations Conference on Trade and Development

The recent political developments and rising attacks causing instability in the country have also contributed to the fall in the Turkish stock exchange. The Turkish economy has been hit by the unsteadiness that followed the June 7 general elections in which no political party received enough votes to form a simple majority in the parliament.

The Turkish exchange’s precious metal market Istanbul Gold Exchange also lost in value on Friday, with gold trading at TRY108,110 per kilogram.
($1 = AED3.67, TRY1 = AED1.26, at the time of publishing)