A curious aspect of the new GDP series (which I’ve covered here, here, and here) coming out of Turkey is the divergence between GDP growth and the stock market. Whereas official GDP statistics shows higher growth during the 2010-2015 period than the preceding six years 2004-2009, the opposite is true for the Turkish stock market.

This can be seen from the data series published by Turkstat called “The Rates of Financial Investment Real Profits’, which tracks the real returns of not just an investment in the flagship BIST100 equity index of the Borsa Istanbul, but also investments in US dollars, the Euro, Gold, Government debt, as well as bank deposits.

The below graph shows real (inflation-adjusted) return indices for all of these asset classes between January 2004 to January 2017, with the base month set to January 2010.

Whereas in the per-2010 period, equities was the asset class that yielded the highest return (the blue line has the lowest starting point among the series and thus the highest increase up until the base month in January 2010), in the post-2010 period it had the lowest return (the blue line has the lowest end point of all the series). Continue reading →