Tweet: Turkey’s weight in the MSCI EM Index / Chart by Emre Akcakmak (@akcakmak).

Short-selling ban, FX market restrictions

Turkey on March 10 re-imposed an exchange-wide Borsa Istanbul short-selling ban, MSCI noted earlier this month in its Global Market Accessibility Review.

Frequent changes in rules and the continuous imposition of restrictions are not a desirable feature in the short-selling framework, it added.

There have been several interventions by the authorities that restrict the functioning of the FX market, including a delay in the settlement of some transactions, MSCI also said.

Government interventions may call into question the stability of the country’s institutional framework, according to MSCI.

Insurance and asset management businesses separate

Mapfre (Madrid/MAP) Group is the largest insurer in Spain plus the leading multinational insurance group in Latin America. It is also active in Turkey through its Mapfre Sigorta unit (acquired in 2007, it is the 12th largest non-life insurer in the country with a 2.6% market share as of 2024).

Mapfre Group’s asset management unit Mapfre AM is the largest non-bank money manager in the country. The insurance operations are entirely separate from the asset management arm. The insurance business does have a presence in Turkey, but this is not related to Mapfre AM’s investment activities.

Investment fundamentals

Mapfre AM is currently not investing in Turkey, not because of the Iran-Israel conflict but rather as a consequence of domestic economic factors. The decision is purely based on investment fundamentals as current valuations of Borsa Istanbul-listed Turkish companies do not align with Mapfre AM’s criteria.

High inflation, unstable currency, no central bank independence

“In general, it is very difficult to have a place in our portfolios for this type of markets/countries with high inflation, a very unstable currency and no or low independence between the central bank and government,” Berenguer added, replying to bne IntelliNews' emailed questions on Mapfre's interest in Turkish papers.

Iran-Israel war to trigger global stagflation?

The Iran-Israel war began on June 13. June 24 brought a ceasefire announcement from Donald Trump. As of noon (CET), whether that ceasefire could hold was highly questionable.

The observer could recall that the Ukraine War flared up after Trump attempted to set up some ceasefires in that conflict.

The Brent oil price nosedived into the $68s from the $76s following the ceasefire announcement. As of noon, oil traders were still betting on the ceasefire holding.

Berenguer noted the downside risks of higher inflation and even the possibility of stagflation.

“Inflation has been favourable in most regions, supported by falling commodity and energy prices, but now the price of a barrel of oil is back where it was at the start of the year,” he said.

About 20-30% of the world's oil goes through the Strait of Hormuz that lies of the shores of Iran and Oman. It remains under threat of closure amid the tensions.

End of global easing?

The recent drop in crude oil prices was one factor that allowed central banks to commence with rate cuts as inflationary pressures eased, according to Berenguer.

It follows that a sustained upturn in energy prices could slow or reverse this easing process.

If oil prices remain at the prevailing levels, inflation will not necessarily spiral out of control. However, if a floor is set at these levels, it would be more difficult to maintain the price moderation seen in recent times.

This could cast doubt on future rate cuts expected from the European Central Bank (ECB). Before now, such cuts have been anticipated for the remainder of 2025.

The ECB will now have to wait for greater clarity before making further rate cuts, according to Berenguer.

The Fed’s inflation and growth forecasts are, meanwhile, transitory and we will have to wait for the outlook to become clearer, he also said.

Short-term bonds, dominant companies, course of gold not clear

“We cannot be directional in terms of risk assets, because uncertainty is quite high,” Berenguer said.

In terms of fixed income, the focus should be on short durations and high-quality credit, and in terms of equity, it should be on companies with pricing power and good growth expectations, he recommended.

As for gold, it has gained weight as a structural element in portfolios, driven by geopolitical uncertainty and an increase in global reserves. However, Mapfre Inversion does not see clear appreciation potential. That would depend on further purchases by central banks.