Markets bracing for volatile week as elections loom
ISTANBUL
![Markets bracing for volatile week as elections loom](http://image.hurimg.com/i/hurriyet/75/0x0/59c84bea45d2a027e83bc3af.jpg)
A man wears a mask showing the Turkish Prime Minister during a rally in Istanbul on March 23. Already-strained political environment has been further stretched after Twitter ban and Syria rift. AFP Photo
Under pressure from turbulent political developments, financial markets are bracing for a volatile week ahead of local elections.The investors, most of who have opted to watch and see the results of the municipal election that will be held on March 30, may make bolder moves than expected. The government’s ban on Twitter coupled with the downing of a Syrian warplane has escalated stress in politics, analysts say.
Politics have been a major source of concern for investors since the launch of a corruption investigation into a number of government allies on Dec. 17, 2013 that publicly kindled a feud between the Justice and Development Party (AKP) government and Islamic scholar Fethullah Gülen, who is accused of being behind the operation.
Leaked audio tapes anonymously posted on social networking sites that purport to reveal corruption in Prime Minister Recep Tayyip Erdoğan’s inner circle also raised major questions regarding credibility and accountability.
The adoption of two controversial bills that ramp up government control on the Internet and Supreme Board of Judges and Prosecutors (HSYK), as well as the toughening rhetoric of the prime minister, have added to both local and foreign entrepreneurs’ worries over the course of politics in the country.
Despite all of these, the private sector has been acting as wanting to wait and see what will happen on March 31, a day after the election.
However, last week the government blocked Twitter, a vehicle for many of the audio tapes, in a move condemned by opposition parties and Western governments as undemocratic. And even before the turbulence surrounding the issue was abated, Turkish fighter jets downed a Syrian jet on March 23 after it crossed into Turkish airspace, stirring fears of war.
These intense political agendas may prompt bold sell-offs in the market, as the country’s economic strength is also under scrutiny due to the adverse effects of Fed bond purchases tapering and intimidating current account balances.
The Turkish market was mixed yesterday and analysts expect Turkish assets to continue underperforming.
“Given the Twitter ban, the Syria incident, local elections at the weekend and the probability that political tension may escalate during the week, we might see the pressure on Turkish Lira assets maintaining through the week,” said Gökçe Çelik, an analyst at Finansbank.
The main Istanbul share index was up 0.26 percent at 64,749, lagging behind the main emerging markets index, which rose 0.92 percent.
Turkey’s 10-year benchmark bond yield rose to 11.29 percent from 11.24 percent at last week’s end.
The lira strengthened to 2.2398 in the morning against the dollar, rising from 2.2448 late on March 21.