HSBC Approaches Long-Term Turkish Bonds with Caution

HSBC approaches long-term Turkish bonds with caution. The bank is keen on Chinese and Russian bonds.

HSBC analysts, including Andre de Silva, stated in a research report that they maintain their cautious stance towards long-term bonds in India, Indonesia, Turkey, Mexico and Brazil, but they see opportunities in long-term bonds in China and Russia. Analysts said that the weakening in the dollar and the strengthening of developing country currencies since April supported developing country bond yields, adding that the strengthening of the exchange rate was the biggest factor supporting the emerging country bonds in May. According to data compiled by HSBC analysts, the country with the highest total bond yield in May was South Africa, while the lowest country was Chile. Turkey, on the other hand, was the second country with the lowest total bond yield due to the depreciation in the exchange rate. While the Turkish lira was the developing country currency that lost the most value with a decrease of 2.32 percent in May, the South African rand was recorded as the currency of the developing country that gained the most value with an increase of 5.52 percent in the same period. In the report, the country with the highest ratio of short-term foreign debt to foreign exchange reserves among similar countries was Turkey with 231.1 percent, also the country with the lowest import coverage ratio was Turkey with 3.1 percent.