Turkey’s market has clawed back a large part of its post-September losses, occasioned by legal and diplomatic conflicts with the United States.
China appears to be the countervailing force in the Turkish stock market: the top performer in the Turkish market during the past month is China-allied Turkcell, up 9% in local currency terms. The Turkish mobile broadband provider inked a business alliance with China’s top telecom equipment manufacturer Huawei last May after Turkish President Erdogan visited Beijing.
In June, Turkcell and Huawei conducted their first test of 5G mobile broadband with download speeds of a blistering 70 gigabytes per second. Turkcell had conducted an earlier test of 5G technology with Ericsson in January 2017, with download speeds of just 25 gigabytes per second. Huawei and Turkcell also announced a joint production and R&D agreement in May.
With a 70% smartphone penetration rate, Turkey is second only to China in smartphone usage among emerging economies. Turkey’s finance ministry has a plan to move to a cashless payment system on the Chinese model. In an economy burdened by a low formal labor force participation rate and a large informal economy, fast mobile broadband is likely to have a profound impact on improving productivity as well as efficiency of tax collection.
A new railway link between China and Turkey is opening this month as well. As Turkey hitches a ride on China’s economic boom, it depends less on the United States.