It’s a great uh and very hectic time to decide whether tests whether or not in west you are one of the well-known strategists in turkey because you are with us please tell me the way that you are thinking about investment what is the main theme meaning should they sell their stock holdings because they’re worried about a bear market and recession around the corner or because most of the uncertainty has already been factored into stock prices that now is the time to be buying i still think that there are challenges ahead as it relates to the geopolitical situation in ukraine as well as what the fed is likely to do at its mid-march meeting so one thing is certain and that is that volatility will remain elevated okay uh as long as the politics is concerned what is the next episode of uh this political problem i mean for example if uh china uh decides to invade taiwan or something like that or the this is just uh story uh just uh speculated by the markets it is markets because china has mentioned that it does feel that taiwan is a part of mainland china um and so because of the uh situation in ukraine uh the the worry is that that could give china an increased reason to invade taiwan um at this point we don’t think that that is a likelihood but it is a situation that has increased in probability since the russian invasion of ukraine also we see that north korea has sent up several more uh test rockets so we just find that there is an awful lot of uncertainty from a geopolitical perspective around the globe okay one or another i think there will be more volatility in terms of geographical uh problems the other one is the policy making or the uh interest rate decisions of the mpc uh what what are you uh expecting to see from the fed side well i expect to see a one quarter of one percent rate increase so a 25 basis point rate hike when they meet in the middle of march um we have had five rate tightening cycles since 1990 and every one of them has started with a 25 basis point increase the fed likes to start slowly they tend to then increase rates by 25 basis points at the second meeting third meeting and it’s usually at the fourth meeting or so that if they feel they need to speed things up then they raise rates by 50 or 75 basis points so our belief is that they will have three 25 basis point increases by mid-year and then possibly two more by the end of this year so five in total but we don’t see a 50 basis point hike initially and we don’t think that they will need to go seven this year as some strategists are calling for okay as far as i know uh errors like uh those inflation expectations are writing it’s not bad for the stock market as far as i know but on the other hand there is the liquidity which will be i mean raccoon by the fed on the other side what is going to be the impact as long as the uh global stock markets are concerned do you expect to see a decapitalization uh between uh developed markets or developing markets well i think first off that’s multiple part question but in terms of inflation that is certainly a concern for investor today for cpi uh we’re only going to be getting the february data uh this coming week in which we likely to see seven point eight percent year on year increase but that will come up to an 8.0 percent year-on-year rise with the march data so that is a concern because there is a direct correlation between inflation and interest rates if you take a look at the 1970s we started that decade at a 5.4 percent year-on-year rise in inflation and ended the decade at 12.4 and for that whole 10-year period we only posted a compound annual growth rate of one and a half percent for the s p 500. so higher inflation leads to higher interest rates which then leads to lower stock prices in terms of what might be more adversely affected uh our belief is that we probably will see more pressure from the emerging market side than we will on the develop side at least as it relates to interest rates our expectation is from a a global gdp perspective that emerging countries could see about a 4.4 percent gdp rise in 2022 but that’s down sharply from the 6.4 rise that we saw in 2021 what about china how is china economies performing chinese economy is doing very well uh up 8.1 in 2021 and expected to be up four and a half percent in 2022 so it’s still one of the stronger economies out there and recently china had indicated that its goal is for a five and a half percent increase in gdp this year so still china is a strong economy but certainly not as strong as it has been in past many years what about the us because i’m asking this question because most of the people think that the real conflict is not just between uh us and russia or u.s uh ukraine between russia but uh you know uh one of the biggest uh challenging economy i mean the telling the u.s economy is china at the same time how is u.s performing and what is going to be the impact of this kind of i mean uh geographical problems uh over uh u.s economy china economy and of course the uh global economy well we have certainly seen a reduction in earning in expectations for the global economy at the beginning of the year it was expected that we would see a five and a half percent rise uh in gdp uh in 2022 now that number is closer to 4.1 percent uh so certainly expectations are for weaker economic growth across the globe um the biggest declines are likely to occur in the advanced economies we were likely to see about a 4.3 percent gain now looking for 3.7 i think that the real worry that investors have around the globe is will the us be losing its military might if you will or its uh geopolitical standings if we don’t in a sense stand up to the bullies around the world uh does that mean that we lose our stature uh in terms of defending uh our nato alliances so i i think that uh the us is is obviously playing it very carefully because we are dealing with two superpowers with nuclear capabilities so trying to assist the ukrainians uh through pretty creative measures uh financially in particular uh but also by sending uh migs from poland to ukraine in order to fight the russians on their own so it looks as if the longer that the ukrainians can hold out uh and because of the impressive um uniform response by the western world i think that has caused people to feel a little bit better about how the us can lead such a coalition okay um turkey is one of the most important ally i don’t know if it still saw like that but uh um correct me if i’m wrong but uh your ex uh president trump uh said uh uh sending uh clear message with or without me i think it’s still uh on the uh desk that it’s clear that you you should have to decide whether you are with the nato nato allies or without them uh do you think that turkey might be or loser or winner uh in terms of investment because you know uh if uh nato or us want to send a clear message to the bullies it means that you have to be with the your allies and uh one of the uh most suffered i mean country is turkey in terms of trees them in terms of uh fx market in terms of energy prices in terms of grain i mean uh buying from abroad do you think that this kind of i mean uh problem has a very very different meaning for turkey or the investment in turkey well i think that certainly you cannot uh look toward the prior president you have to look exclusively at the current president the current administration and the current policies and i think that not being a political expert that the us’s stance is one of embrace uh accepting uh the members who want to work with the united states but i don’t think it is a binary situation where you’re either with us or you’re against us uh i think the us is simply trying to put together a coalition to help stave off the russian invasion of uh ukraine um but i think that we all realize how important uh the trading partners are around the globe and we would rather have that uh continue and actually increase rather than trying to set up walls between ourselves and other trading nations okay as the last question uh what i understand is that it’s going to have uh some more time to settle down this kind of uh i mean conflicts between countries russia ukraine china and others uh but on the other hand the turk uh all the global economy will suffer uh i mean growth rate will diminish uh and inflation is going to be still high.
What do you recommend your investors to invest in order to keep their savings against the inflation?
Well, the first thing that they should do is to protect their portfolios from their own emotions, because it’s usually the worst time when investors feel the most panic that over the long term the best investment out there to beat both inflation and taxes is stocks so typically you know you’re better off looking for reasons to buy stocks at depressed prices than you are to sell your stocks at these depressed prices especially if you happen to be somebody who’s approaching retirement. You want to be focusing on those companies that now are offering a very attractive dividend yield because of the lower prices. Think like a landlord not like a trader, focus on dividend yields as if they were tenants within your rental apartments, look for those that consistently pay a good dividend and have no problem with annual increases so like a tenant to make sure that they continue to pay and they don’t want to leave should you want to raise their rent; so same goes for the stock prices. Look for those that represent a good opportunity now that prices have come down so much.
