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April 20, 2018 www.intellinews.com I Page 6
centre to centre-right Iyi (Good) Party, founded just months ago by a big rival of the president, former interior minister and high-profile politician Meral Aksener, will be barred from running in the parliamentary contest. Bloomberg quoted an unnamed official as saying a change would be needed in the legal system to allow such a young party as Iyi to run.
Aksener, who split from the MHP, which her party was expected to draw votes from, is intending to stand for president. Pro-Erdogan newspaper Daily Sabah late on April 18 quoted Aksener as vowing that her party would be on the parliamentary ballot. She also announced on her Twitter account that she will contest the presidency, having secured 100,000 signatures that back her candidacy.
Faster than China, but overheating?
Turkey may be growing at a faster pace than China or India, recording as it did a debt-fuelled GDP expansion of 7.4% in 2017, but all the
signs are that the “warp-speed” economy is overheating and may come off the rails. Amid double-digit inflation and a surging current account deficit, a sinking Turkish lira (TRY) and Erdogan’s strictures on why the country should defy orthodox thinking by resisting interest rate hikes—leading observers to question whether the central bank de facto still has monetary independence—anxiety has built that the
good times may soon no longer roll. Turkish conglomerates are presently renegotiating debt they are struggling to pay, Moody’s Investors Service has warned that Turkey’s banks are growing more exposed to problem loans, while the Turkish stock and bond markets have shown signs of stress.
Markets, seemingly assessing that a freshly elected government will have the mandate to effectively deal with the evolving economic malaise, were lifted by the announcement of early elections, first called for by MHP leader Devlet Bahceli.
“The market is loving it, as I think most people
assumed that the macro would not hold out until scheduled elections in November 2019,” said Timothy Ash, an analyst at BlueBay Asset Management. “By going early he [Erdogan] reduces the period of uncertainty in Turkey, and I guess the hope is that a new government in place by late June can better address some of the big challenges facing Turkey.”
Turkey’s dollar-denominated bonds gained across curve on the election news with longer- dated issues adding around 1 cent. Longer-dated maturities took the biggest gains, with the 2045 bond registering its most extensive daily gain
in two months. It was trading at 98.852 cents, Tradeweb data showed.
The TRY, meanwhile, extended its gains after Erdogan’s announcement. At around 19:00 Istanbul time it stood at 4.0238 to the dollar, compared to the low of 4.1272 seen the day before and the all-time low of 4.1944 seen on April 11.
The BIST-100 benchmark index of the Istanbul stock exchange gained 3.08% to 112,099 on April 18, having been flat until the afternoon election announcement.
State of emergency hangs over elections
Turkey looks set to hold the elections amid its state of emergency, with the national security council having on April 18 recommended to parliament that the special regime, brought in following the July 2016 coup, is still required for the governance of the country and should be extended for a seventh time. Later on April 18, lawmakers voted to extend the emergency regime. After the election date was confirmed, Turkey’s main opposition party, the Republican People’s Party (CHP), demanded an immediate end to the state of emergency.
“The state of emergency needs to be lifted immediately, there cannot be an election under emergency rule. The country needs to brought out of the emergency rule regime starting today,”