Turkey s Saving Deficit Issue From an Institutional Perspective Engin KURUN, Ph.D CEO, Ziraat Asset Management Oct. 25th, 2011 - Istanbul 1
PRESENTATION Household and Institutional Savings Institutional Investors Perspective Policy Issues Global Outlook 2
COMPOSITION SAVINGS 3
CURRENT ACCOUNT DEFICIT 4
MUTUAL FUND ASSETS EUROZONE (Mio. Eur) TOTAL NET ASSETS Equity Funds Bond Funds Austria 80.359 15,0% 51,1% 13,5% 3,3% 16,1% 1,1% Belgium 87.478 46,1% 10,5% 20,5% 2,6% 20,3% 0,0% Bulgaria 231 33,5% 6,5% 25,8% 33,9% 0,3% 0,0% Czech Republic 4.828 12,9% 15,5% 22,4% 33,3% 15,9% 0,0% Denmark 66.966 40,1% 56,3% 3,2% 0,0% 0,4% 0,0% Finland 52.441 37,2% 28,1% 14,3% 20,1% 0,0% 0,3% France 1.172.954 28,5% 16,8% 22,0% 31,4% 0,0% 1,3% Germany 247.337 47,9% 20,5% 21,7% 3,4% 0,0% 6,6% Greece 6.188 25,7% 33,6% 17,2% 15,4% 8,1% 0,0% Hungary 9.659 21,0% 11,9% 0,7% 52,2% 10,2% 4,0% Ireland 769.965 Italy 161.933 14,4% 36,6% 29,4% 19,7% 0,0% 0,0% Liechtenstein 26.713 14,1% 17,8% 11,2% 3,3% 1,3% 52,3% Luxembourg 1.857.679 32,6% 30,1% 16,1% 14,4% 0,0% 6,8% Netherlands 62.006 44,5% 20,0% 15,8% 0,0% 0,0% 19,8% Norway 67.997 55,2% 21,8% 3,7% 18,7% 0,0% 0,7% Poland 19.028 34,1% 15,1% 16,3% 14,6% 0,6% 19,3% Portugal 7.829 18,4% 27,0% 11,1% 14,4% 5,7% 23,4% Romania 1.583 3,3% 18,8% 4,5% 52,6% 0,1% 20,7% Slovakia 3.428 6,7% 14,6% 15,7% 47,8% 8,1% 7,1% Slovenia 1.985 64,6% 3,8% 28,7% 1,0% 1,7% 0,2% Spain 162.020 30,3% 42,8% 22,4% 4,5% 0,0% 0,0% Sweden 157.478 63,9% 5,8% 17,3% 6,2% 5,5% 1,3% Switzerland 207.371 30,1% 23,6% 37,7% 8,6% 0,0% 0,0% Turkey 12.594 3,6% 7,6% 8,9% 77,3% 0,1% 2,6% United Kingdom 673.098 57,2% 18,0% 8,9% 0,5% 7,2% 8,2% TOTAL 5.921.148 41,0% 27,6% 18,8% 21,7% 1,8% 5,4% Source: EFAMA Quarterly Statistics, June 2011 Balanced funds Money market funds Funds of funds Others 5
MUTUAL FUNDS IN/OUTFLOWS Table 4. Net Assets of the European UCITS Industry 30/06/2011 31/03/2011 31/12/2010 Members EUR m Share EUR m % chg (1) EUR m % chg (2) Austria 80,359 1.4% 82,621-2.7% 84,725-5.2% Belgium 87,478 1.5% 88,121-0.7% 91,086-4.0% Bulgaria 231 0.0% 241-4.3% 227 1.6% Czech Republic 4,828 0.1% 4,854-0.5% 4,806 0.5% Denmark 66,966 1.1% 67,657-1.0% 67,556-0.9% Finland 52,441 0.9% 53,448-1.9% 53,293-1.6% France 1,172,954 19.8% 1,196,943-2.0% 1,210,280-3.1% Germany 247,337 4.2% 247,507-0.1% 249,500-0.9% Greece 6,188 0.1% 7,085-12.7% 7,046-12.2% Hungary 9,659 0.2% 9,795-1.4% 9,327 3.6% Ireland 769,966 13.0% 752,055 2.4% 758,946 1.5% Italy 161,933 2.7% 167,668-3.4% 175,358-7.7% Liechtenstein 26,713 0.5% 27,071-1.3% 26,784-0.3% Luxembourg 1,857,679 31.4% 1,869,791-0.6% 1,880,612-1.2% Netherlands 62,006 1.0% 62,832-1.3% 64,305-3.6% Norw ay 67,997 1.1% 67,566 0.6% 63,847 6.5% Poland 19,028 0.3% 19,267-1.2% 19,322-1.5% Portugal 7,829 0.1% 8,347-6.2% 8,760-10.6% Romania 1,583 0.0% 1,493 6.0% 1,280 23.7% Slovakia 3,428 0.1% 3,496-2.0% 3,542-3.2% Slovenia 1,985 0.0% 2,016-1.5% 2,050-3.2% Spain 162,020 2.7% 165,699-2.2% 164,500-1.5% Sw eden 157,478 2.7% 161,267-2.3% 162,446-3.1% Sw itzerland (3) 207,371 3.5% 194,002 6.9% 207,009 0.2% Turkey 12,594 0.2% 13,753-8.4% 15,900-20.8% United Kingdom 673,098 11.4% 675,071-0.3% 675,401-0.3% All Funds 5,921,149 100% 5,949,664-0.5% 6,007,907-1.4% (1) End June 2011 compared to end M arch 2011; (2) end June 2011 compared to end December 2010; (3) the asset growth reflects a growing number of funds captured by Swiss data. 6
MUTUAL FUND PER CAPITA GDP per capita (USD) Mutual Fund per capita (USD) Mutual fund per capita excluding MM funds (USD) S.Korea 20.168,83 5.746,42 4.243,35 Brazil 10.484,60 4.160,62 4.004,15 S.Africa 7.102,48 2.244,49 1.559,12 Poland 11.522,31 669,29 590,55 Hungary 13.227,60 1170 520 Czech 18.750,00 528,85 288,46 Mexico 9.245,32 748,62 281,77 China 4.284,22 258,02 245,34 India 1.176,95 96,63 82,3 Turkey 10.210,80 268,91 60,22 Russia 10.519,32 25,64 25,64 MUTUAL FUND / GDP EQUITIES / GDP U.S. 79 85 FRANCE 63 61 BRAZIL 43 47 CANADA 40 121 S. KOREA 26 114 JAPAN 14 45 MEXICO 13 47 ITALY 11 29 GERMANY 10 35 HUNGARY 9 9 INDIA 7 43 CHINA 6 50 PORTUGAL 5 43 CZECH REP. 3 45 GREECE 3 22 TURKEY 3 36 7
EUROPEAN BANKS TOTAL EXPOSURE TURKEY: 170.7 bn GREECE: 126.7 bn ITALY: 832.2 bn GERMANY: 1.3 tn U.K: 2 tn 8
POLICY ISSUES - I Financial system in Turkey is heavily depending on Banking sector (approx. 82%) and savings are mostly allocated to bank deposits (approx. 70%) Managed funds have only 8% share on total household savings. GDP growth should be consistent in order to increase savings but because of young age population in Turkey, it is not possible to accumulate. 42-50 ages are best period for saving purpose therefore we hope to increase savings as Turkish population becomes older. Government policies for pension funds are not supportive enough. We need new regulations on asset management side. Public funds should be managed by the private asset management companies. We may start this solution with currently discussed Severance Pay reform. 9
POLICY ISSUES - II We believe it is possible to increase savings through pension funds via 50% defined contribution and 50% defined benefit. There should be some tax improvements on capital market instruments, in order to develop these markets. Public funds and pension funds will accelerate savings growth. Turkish Sovereign Wealth Fund should be established and this fund should invest strategic sectors on equity side and long end of the yield curve on bonds side. In future this fund may invest abroad. We belive if such improvement occurs whole portfolio or at least part of it will be given to private asset managers. Global crises shows us the importance of portfolio protection. We need more financial instruments especially on derivatives. Recently published Medium Term Program for Turkish Economy and Istanbul International Financial Center project will also fuel a.m. issues. 10
ASSET MANAGEMENT GLOBAL OUTLOOK 11
USE OF HEDGING INSTRUMENTS 12