What They Say
The Turkish lira plummeted by 7% in a single night this week against the US dollar. Analysts are deeply sceptical about the policy of Turkey’s President Erdogan. The currency is around half the value that it was in February of this year. Erdogan has fired three central bank chiefs over the last two years due to disagreements over monetary policy.
Separately, the Chinese property segment is under severe stress because of a default by Evergrande, a property company, with another, Shimao also dropping rapidly in stock price. Overall, Bloomberg’s China Real Estate index has dropped by around 40% since the early part of the year. The Chinese government, it has been reported, is not stepping in to bale out Evergrande.
What We Think
As I’ve said before, I try to stay away from macroeconomics, but these big stories do concern me. Big economic events can impact every industry. I have been nervous about the situation in China for a while (Krugman on China’s Bubble)
A phrase that I think of when considering macroeconomics.
“When the financial tide goes out, it leaves some companies with weaker business models stranded on the beach”. (BR)
