About Said Haidar
In August 2018, Said Haidar, founder and CEO of Haidar Capital, commented on the financial impact of political tensions in Turkey. He stated that Turkish President Erdogan did not appear to be backing down, and that the situation could lead to an increase in non-performing loans and a flow-through effect on the European banking systemched. Haidar identified Italy and Spain as the most exposed countries due to their trade links and ownership of Turkish banks. He also said that the Trump administration's quick imposition of sanctions on Turkey and Russia served as a warning to China.
Haidar argued that the divergence between strong US growth and tepid global growth was causing emerging markets to underperform US equities. He suggested that upcoming Federal Reserve rate hikes would put further pressure on emerging currencies. While acknowledging that the short-term outlook for emerging markets could worsen, Haidar noted that these markets had recovered from previous crises in 2013 and 2015, and that from a valuation standpoint, emerging markets appeared cheap relative to the US.
Source: AI-verified profile updated from Said Haidar's recent appearances.
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Transcript (9 segments)
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Said Haidar0:11
There will be increasing non-performing loans. You're going to have a flow through to the European banking system. We've already seen some effect on the European banks and the euro because of that. The most exposed countries with respect to the Turkish lira are actually Italy, which is one of the largest trading partners and also has significant ownership of a Turkish bank, and Spain as well. So I do think there could be a knock-on effect, and there could also be contagion to other countries. And the Trump administration being so quick to increase sanctions on Turkey, you've seen them do the same thing for Russia.
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Interviewer1:12
The Clinton administration set up a bailout for the Mexicans and tried to stabilize every time there was a problem. You weren't enthralled with the recent snapback in EM anyway. You look at that as a bear market rally, so you think selling strength on emerging?
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Said Haidar1:32
Yeah, I think you're coming up to the next Fed meeting. They're going to raise rates. The market's been unwilling to price in more rate hikes until you get closer to that rate hike. So there will be more rate hikes starting to get priced in the next month, and that'll just put more pressure on EM currencies. You're getting a huge divergence in relative risk assets. You're seeing EM massively underperform.
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Interviewer2:13
Outside the US more than in the US, or no?
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Said Haidar2:15
No, I think in the short term I would agree that there is a chance, especially in emerging markets, of contagion through the channel of currencies. We've seen for instance the South African rand and the Brazilian real trade off in sympathy. So I definitely will attest to that. This could get worse in the short term, especially because Turkey's political situation is not improving. Having said that, from a valuation standpoint, if you're looking out three to five years, even if you look at the cyclically adjusted P/E ratio, the US is above 30, EM is at 13. That's basically only 20% of the time has it been below that.
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Interviewer3:12
Really bearish? Smarter when you bear? There are bears that sound smart, and bulls make money. Because I've got to make a living being bearish, but all they really do is... That's what your bond guys usually sound very smart, they're usually right.
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Said Haidar3:33
Yeah, exactly. You never get fired, at least from your writing job. You never get fired. And this is worrisome though. Turkey is not theoretically a size that could cause a systemic problem. It's actually a big economy that has a lot of trade links with Europe, which will be the ones that feel the brunt of it.
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Interviewer4:11
The iceberg of what the world is going to look like as interest rates and central banks start to tighten. What if this is just a warning sign? Get ready world, here's what's coming.
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Said Haidar4:21
One thing that I would add on that front is don't forget that EM went through basically two huge hiccups already: 2013 and by the end of 2015. Oil was at $30, people were talking about China's currency basically breaking. And EEM basically people said stay away, don't touch it. And then we actually eventually saw some of it come back. So I don't necessarily think that we haven't seen any damage already done in EM over the last couple of years. That's important to mention.
