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Turkey Weekly Macro Comment

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Semi−Reluctant Recruits into the No Closure/No Ban Camp?

Tue, Jul 22 2008, 09:07 GMT
by Yapi Kredi Bank Economic Research Department

Yapi Kredi Bank

Domestic political scene is getting more interesting on a daily basis.

US ex-Ambassador to Turkey Mark Parris’ remarks in Washington last week regarding the AKP closure case led to repercussions on the economic definitely beyond his intentions and arguably his imagination as well.

Here is the unorthodox, to the ultra seculars the blasphemous assessment regarding the duration of this struggle which some choose to label as a post-modern war. I believe that the war is over and that the two sides are indeed discussing the terms of the treaty without signaling it as such to their followers.

The bet that is made here is one that may be overestimating social dynamics at work and also the rationality and compromise tendency of the parties in question, but making a bet requires thinking and thinking entails doubting yourself.

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Published on  Tue, Jul 22 2008, 09:07 GMT

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Silence Before the Storm, and Regardless

Wed, Jul 2 2008, 10:28 GMT
by Yapi Kredi Bank Economic Research Department

Yapi Kredi Bank

2008Q1 GDP results were announced this morning and markets were pleasantly surprised by the 6.6% figure as opposed to the consensus expectation of 5%. It will have a close to nil impact on local sentiment but foreign investors whose time horizon is usually longer than locals’ could interpret the figure a bit more favorably going forward

Closure case might be approaching its final phase; SP will present his case orally in front of the Constitutional Court tomorrow and AKP will deliver its oral defense to the same audience on Thursday.

If the SC prepares the report within the next two weeks, and we assume that he definitely will and that he has already prepared the bulk of it, we may have the ruling by early August or maybe even at the end of July.

Please look inside for some very humble and definitely not ambitious sociological, maybe anthropological, assessment of our never ending problem with justice in general and with the judiciary in particular in Turkey.

We are still of the contention that asset prices reflect neither the best nor the worst case scenario. That will probably be so until the ruling is announced as this CC’s most intriguing feature is arguably is unpredictability. That is our very subjective view, we have to admit. Most analysts believe that the ruling is a sure closure/ban one.

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Published on  Wed, Jul 2 2008, 10:28 GMT

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Turning "Suspected Democrats" into Martyrs of Democracy

Wed, Mar 19 2008, 09:18 GMT
by Yapi Kredi Bank Economic Research Department

Yapi Kredi Bank

• • The latest move by Chief Prosecutor of the Supreme Court of Appeals is yet another move to discredit the AKP government with the intended final outcome of shutting it down.
  
• • When one looks at the composition of the members of the Constitutional Court, whose 8 members of its total of 11 were appointed by the staunch secular ex-President Sezer, a shut down decision seems likely, at least mathematically
  

• • We may have had party closings in the past, but that was in a much different country with repercussions hardly similar to what we may have to face if the Prosecutor’s appeal is entertained by the Constitutional Court

• • My gut feeling is that the indictment will fall and AKP will escape unscathed. Central Government budget for the month of February were announced last week and results are extremely encouraging
  

• • Current account deficit in January materialized as USD 3.9 billion. 12-month rolling FDI financing of the current account deficit is steadily coming down, but corporate borrowing remained firm to most analysts’ surprise.
  

• • We expect selling pressure in ISE-100 and in the fixed income market as well. And for a change, we Turks are not Americans as of Friday evening anymore.

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Published on  Wed, Mar 19 2008, 09:18 GMT

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Turks' Test with Numbers, Again

Tue, Mar 11 2008, 15:07 GMT
by Yapi Kredi Bank Economic Research Department

Yapi Kredi Bank

Long awaited GDP revisions were finally out on Saturday and the extent of revision was at the higher end of the expectation interval.

While the revision has not created any favorable sentiment change and is unlikely to do so in the foreseeable near future, it should be a significant trigger factor once the dust settles in global markets.

Compared to the previous unrevised data, share of private consumption is substantially higher while public investment and consumption expenditures are lower.

Public sector consumption and gross capital formation are also lower, implicating an increased share for the private sector in the output creation process.

MPC will have its March meeting on the 19th and we believe that it will choose to terminate the easing process temporarily.

Credit, real estate, and labor markets in the US have not seen the worst yet, most analysts believe, but the worst is still not being priced. Further USD losses should hurt high-beta currencies the most and YTL is perceived as one of them, even if that may or should have eased as an argument following the GDP revision announcement last weekend.

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Published on  Tue, Mar 11 2008, 15:07 GMT