Turkish firms' resilience bode well for 2018: Moody's

By Gokhan Kurtaran

LONDON (AA) - Moody’s rating agency said Wednesday Turkish companies gave good signs for 2018 despite currency volatility and political risks.

The agency said most rated Turkish companies had healthy balance sheets, strong liquidity and market leadership positions, as well as good records of operating in a challenging environment.

“Export-oriented manufacturing companies in Turkey will see growth opportunities as demand in Europe increases, supported by a weaker lira,” Rehan Akbar, vice president and senior analyst, said.

“Companies in the tourism, hospitality and aviation sectors will be buoyed by improvements in the security situation but the environment will remain potentially volatile.”

However, currency volatility and political risk contributed to next year’s negative outlook for Turkish companies.

Higher oil prices and a lack of clarity on policy direction and structural reform also added to the poor forecast.

South African firms face similar difficulties, the agency reported.

“Limited clarity on policy direction and on the pace of implementation of structural economic reforms, as well as political risks and high currency volatility drive the negative 2018 outlook for Turkish companies,” Akbar said.

“Similarly, the negative outlook for firms in South Africa reflects continued political and policy uncertainty and depressed business and consumer demand.”

Moody’s said corporate growth would be moderately lower in Turkey next year as 2017’s temporary stimulation policies end.

According to Moody’s, the fragile macroeconomic environment as well as political and policy uncertainty heightened risks for companies in South Africa.

However, the rising price of oil and committed government spending allowed a positive 2018 prediction for Gulf Cooperation Council (GCC) states, the agency reported.

“Improving oil prices, which are narrowing fiscal deficits, as well as an ongoing commitment to public spending and a supportive stance towards government-related issuers will underpin the stable outlook on GCC companies over the next 12 months,” Akbar added.