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Opinion
April 19, 2019 www.intellinews.com I Page 23
with President Erdogan. But therein, any such intervention would surely still have to involve Turkey buying Patriots, and presumably also still paying for S400s but not having them delivered. Hard therein to see the latter (and S400s) flying at this stage.”
Another observation from Ash is that the Armenian genocide vote is again expected to come up in the US Congress, potentially roiling relations with Ankara further.
Moreover, he disclosed that a JPMorgan survey at the IMF spring meeting showed 80%-plus of investors already did not have confidence in the ability of the Turkish authorities to turn things around.
“So investors were already more or less positioned that way — hard to sell something you don't own I guess. So not sure that the event really changed the story that much,” he said.
Albayrak aftershocks
Meanwhile, the aftershocks of Albayrak’s panned presentation at a JPMorgan-hosted gathering of investors at an invitation-only event in a Washington hotel at the end of last week continued on April 15.
Some attendees called Albayrak’s thin-on-the- details slideshow the worst presentation they’d ever seen from a high-ranking government official, Axios reported on April 15 in a story entitled “Turkey's finance minister held the worst IMF-World Bank meeting ever” and including the remark from one emerging market fund manager that "It was an absolute shit show" and the complaint from another investor that "I've literally never seen someone from an administration that unprepared."
Michael Cornelius of T. Rowe Price, told Axios his biggest takeaway from the week's events
was that he became more pessimistic about the chances for a turnaround in Turkey.
"Not only are the fundamentals not improving, Erdogan is doing worse, investor sentiment is very, very bearish and they still have significant refinancing needs. This could be a systemic issue for emerging markets," he also said.
However, Axios also noted that none of the asset managers who spoke with its reporters said they had no immediate plans to sell Turkish assets.
Chances of a cabinet reshuffle
“A couple of people asked me this morning about chances of a cabinet reshuffle, which might in particular cover the economy portfolio. Actually these people indicated they had heard the rumour — I had not, and thought it unlikely. I guess the talk has come on the back of fall-out from the IMF meetings,” Ash said in an emailed note to investors entitled “Turkey-cabinet reshuffle?”
Removing Albayrak at this stage would surely be seen as an admission of failure in the economic battle.
“At least with Albayrak his close links to Erdogan means that policy can be delivered — he can get the green light for rate hikes — albeit that requires good policy in the first place,” Ash concluded.
Right now, with Erdogan thought very unlikely to go to the IMF, the markets await approval for a currency devaluation to be followed by another bold rate hike. But either with the IMF providing support or with hot money such as was found last September, observers wonder whether Erdogan could employ a stupendous U-turn, even with respect to Erdogan standards who is famous for his dramatic about-turns, when it comes to the S-400 deal.