Board eyes $300 billion infrastructure funds
Posted by meb at January 29th, 2008
Turkey’s Capital Markets Board (SPK) is eyeing funds totaling $300 billion allocated for infrastructure investments worldwide and that remain utilized since last year.
The SPK is working on new instruments to make foreign capital permanent, said SPK Chairman Turan Erol. “There is a great potential in Turkey for foreign investors in the long run. Despite negativity surrounding [global economies], the Turkish real estate sector is crucial for international investors, and growth dynamics support this,” said Erol.
Short-term fluctuations are normal and can always be dealt with in capital markets, said Erol. “However, considering long-term dynamics, Turkey is very attractive for foreign investors in terms of profitability, the real estate sector’s growth dynamics and population dynamics.”
A shield for investors
Investors are interested in financing the mortgage sector, which is in its initial phase, and infrastructure investments, Erol said. “Global finance allocated for infrastructure last year and not utilized since then totaled $300 billion. We are working to keep foreign capital permanently [in Turkey] in the long run. We are considering the foundation of trust companies or investment funds in order to finance investments such as metro and highways.”
Instruments oriented toward infrastructure investments, such as a trust company or investment fund, will help capital markets to gather strength, said Erol. Infrastructure investments work as a shield and provide protection for investors during periods of economic stagnation, he added.
The financing of infrastructure investments will be implemented without putting additional debt burdens on the public, said Erol. “For instance, if you have a metro project with feasibility and evaluation studies, it may be offered to the public as an infrastructure trust company or investment fund over a price determined considering its expenditures and yields. Moreover, it may also be sold to qualified investors prior to a public offering.”
A bourse for SMEs
On small and medium-sized enterprises (SMEs), Erol said that there are works underway to draw foreign investment to these establishments.
A bourse will be formed just for SMEs, he said and added, “Our aim is to institutionalize SMEs in terms of management and financing, bringing in a structure in world standards.”
Principles and conditions to ease the inclusion of SMEs in that bourse will be determined, Erol said. It is foreseen that works concerning the system, which will have some differences compared to Istanbul Stock Exchange (IMKB) companies, will be complete by the end of the year.
Erol is a deliberative optimist’ on the recent financial fluctuation, which started with the subprime mortgage in the United States and reached a global level. “All depends on at what point financial fluctuation affects the real economy,” he said.
If financial fluctuations are experienced during a positive phase of the real economy it would be easier to overcome problems, Erol said.
Liquidity, as well as interest-rate cuts, is required in order to prevent a crisis that might emerge from a fluctuation in global markets, said Erol. “This is also needed to prevent a long-term recession of the real economy. These two aims are consistent. However, inflation is inconsistent.”
source: Turkish Daily News
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