Türkiye Near the Bottom: Why Foreign Investors Should Look Now

Key takeaways

After two years of correction, Borsa Istanbul is back near its 2016 level in dollar terms.
Inflation fell to 29.73% in September 2026; the main obstacle to rate cuts is the shift of savings into dollars.
We expect the lira policy to be reviewed and rate cuts to begin, later than hoped.
Stability, closeness to Europe and its role as a cultural bridge keep Türkiye attractive while the world faces its own crises.

Türkiye has spent two years fighting high inflation, high interest rates and a confidence problem. One result is that Turkish assets have become cheap: Borsa Istanbul is back near its 2016 level in dollar terms. In our view, this is the price of an economy approaching the end of its problems, not the start of them.

What the numbers say

Inflation is falling. Annual consumer inflation eased to 29.73% in September 2026, from 31.51% a month earlier. The central bank holds its policy rate at 37%, a real rate of about 7 points. The numbers leave room for rate cuts.

The September fund crisis shook confidence, however:

The Capital Markets Board (SPK) ordered the liquidation of 131 investment funds.
Borsa Istanbul fell 16.65% in September.
Five-year CDS, the country risk premium, rose from 218 to 255 basis points.
Part of household savings moved back into dollars.

This shift into dollars is now the biggest obstacle to rate cuts.

The managed lira: it worked, but it made Türkiye expensive

The lira has been kept on a controlled path, weakening more slowly than prices rise. That helped bring inflation down. It also made Türkiye expensive, both for its own citizens and for foreign visitors and buyers. The main sectors are now speaking up:

Tourism: foreign arrivals fell 2.3% in the first seven months of 2026.
Construction: the sector's confidence index remains below 100.
Labour-intensive exporters: textiles and furniture are losing competitiveness.

We believe the economic team is under pressure. We expect the lira policy to be reviewed and rate cuts to begin, later than hoped but on their way.

The world is going through a difficult period too

A major slowdown, even a crisis, is expected in the United States and Europe.
US inflation rose to 3.7% in September, and markets are now discussing a Fed rate hike.
Technology stocks are in a sharp sell-off; emerging-market stocks fell 4.6% in one week in October.
War continues in the Middle East, and the situation in Russia remains uncertain.

In this environment, every investor is asking the same question: where should capital go?

Why Türkiye

Stability. Türkiye has no internal conflict and is not a party to the wars around it. International companies will keep coming to Türkiye for this stability in a troubled region.
Europe's closest production base. Türkiye offers Europe the shortest supply routes, backed by decades of trade ties through the Customs Union. If Europe and the US slow down, nearshoring to Türkiye becomes more attractive.
A cultural bridge. Throughout history, Türkiye has held the Middle East, Asia and Europe together. Few places can do business with all three regions at once.
A cheap entry point. Two years of correction have already pulled prices down. When the lira adjustment and rate cuts begin, real assets and long-term investors usually benefit most.

A country that comes out of every crisis stronger

Türkiye has produced some of the best economists and business people in its region, largely because they have faced so many crises. I am 46 years old and have lived through about ten of them. Each time, Türkiye came out stronger.

This crisis has lasted longer than most. We believe it will end the same way, with Türkiye emerging stronger.

Our conclusion

Türkiye is an economy that can make a strong leap once it solves its problems, and we are fully confident it will. For investors who want exposure without the volatility of listed stocks, real estate and venture capital funds supervised by SPK are one option. Their assets are valued by licensed firms, and their disclosures are published on KAP, Türkiye's official Public Disclosure Platform.

Sources: CBRT price developments · CBRT MPC summary · Mahfi Eğilmez · Karar · International Investment · Ticaret Gazetesi · Clearbrook

Serkan Topaktaş
Chairman of FT Portföy, a portfolio management company licensed by the Capital Markets Board of Türkiye (CMB/SPK), managing real estate and venture capital funds in Istanbul.