London trip notes: A calm bearishness

TURKEY - In Brief 16 Apr 2015 by Atilla Yesilada

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Since my return from the Great Conquest of London, 4 international investment banks and three local institutions published research on Turkish elections and the aftermath. The conclusions were eerily similar: Political noise will not taper off after the elections. Since my mission in London was pretty much to spread a similar message and I think most of the market weakness is resulting from the recognition of this observation, I thought it was incumbent upon me to share my trip impressions with my audience. In my usual cavalier “bull running through the china shop” attitude I forgot to ask the consent of my hosts, hence all names are secret, but I and my pal, GSP Marketing Director Mr. Robert Berges, had a chance to chat with and receive questions from ca. 25 investors during a breakfast get-together arranged by an investment bank, to which we express our gratitude. Then, for three and a half days we visited hedge funds, banks and broker-dealers. Roughly 60% of our audience was F/X, rates and credit, the rest being mixed funds and equities specialists. I went to London with a specific message, which can be summarized as follows: · The economy entered a stagflationary path because of lack of confidence in politics. Unless Ankara changes its manner, or the administration engages upon orthodox policies/structural reforms economic recovery is not possible. · The hero of this election is the pro-Kurdish party HDP, and the key event is whether it will make it to the parliament. AKP’s success is a secondary issue; hence taking a bet on an AKP victory is not wise. · Political battles of one sort or other will continue after the elections, possibly through 2015 and 1H2016. · Wh...