Markets can’t see ahead for 2014
It is clear that 2014 will be a difficult year in terms of the economy. If we consider that political tension will be rising with the approaching elections, it is evident that the job of the economic administration will be much more difficult because of politics.
For market players, each new year means uncertainty to a certain degree. Factors of uncertainty about 2014 were already on the rise due to changes in global liquidity, as well as the start of the electoral period.
In other words, everybody was anticipating that they will have a new year where it will be more difficult than ever to see ahead. Yet, the political tension and the fact that the contention will continue has become a factor that increased uncertainty in the economy more than expected.
Market players used to previously ask each other to what degree the U.S. Federal Reserve would reduce its bond-purchasing program and inquired with each other whether hikes in interest rates would take place in 2014. While there were debates about the outcome of the local elections, no one thought up until two weeks ago that there would be such a huge state crisis unfolding.
The question for which local players, as well as foreigners that have investments in Turkey, are seeking an answer is whether political stability will be disrupted.
Obviously, there is no one who precisely knows the answer, but it is clear that it is a question that has intensified the anxieties of domestic and foreign investors.
The prevailing anticipation is that reciprocal accusations and trials will continue until the local elections in March, increasing the political tension.
In addition, the fact that the government has restarted using rhetoric targeting the West, as well as the comments and news in the U.S. and European media that question Turkey’s economic and political stability, has started to seriously frighten the business community.
It’s not just those who have investments in the markets – everyone local and foreign that is engaged in trade and industry in Turkey is uneasy. This unease is growing day by day.
Everyone, including those from the governing Justice and Development Party (AKP), know that the Turkish economy will have a hard time in 2014.
You can then add to these problems the political contention, the rise in foreign exchange rates, the hike in interest rates and inflation, all of which were seen to be “inevitable.”
As this expectation grows, we see those who want to avoid being caught unprepared taking action immediately. As observed in this type of period of change, certain transactions in the market have become very acute.
We are entering 2014 in this type of atmosphere of uncertainty and difficult times ahead. In short, this will be a year when stability in Turkey will be in jeopardy and risks will be growing bigger for investors. Let’s hope this will be a year without contention, without major breaking points and a year when stability will be maintained no matter what.
Despite all the odds, I wish you a happy and healthy 2014.