Weekly Tracker: March 6-12
We think both the investment community and the press devote far less attention to Monday’s EU-Turkey summit than it deserves. Its results could be historic turning points for both sides. The press is cautiously optimistic that EU and Turkey will reach a deal to keep refugees in Turkey, but we have three serious caveats.
This might sound very strange to the reader, but the Erdogan camp is wallowing in fear of a coup, as a result of which it ordered the judiciary to crack down on opposition businessmen and newspapers. We think Erdogan is running out of patience with his enemies, and even with his party and will almost certainly pressure Davutoglu for a presidential referendum this year but don’t exactly know when.
Davutoglu submitted subpoenas for the trial of five pro-Kurdish HDP deputies, including the two co-chairpersons to the Speaker of the Parliament, which makes it very likely that a floor vote will be scheduled to lift their immunities. The nationalist MHP, too, is weakened by leadership struggles. The fate of HDP and MHP could determine the timing of a presidential referendum. This week, PKK announced the start of its spring offensive by truck bombs and attacks on military garrisons. Reports of heart-breaking crimes against civilians in Kurdish towns that had been under siege had hit the press, which might turn the minority against the state. But, even without their help, PKK is going to attack civilian targets in the coming months, adding to Turkey’s economic and political woes.
Trade deficit narrowed in January in 12-month rolling terms, but reflecting weakening tourism and shuttle export revenue, the 12-month rolling current account deficit might have worsened slightly – a figure that will be released this week. On the other hand, preliminary trade data for February showed that 12-month rolling trade deficit continued to narrow in February, thanks, mainly, to ongoing shrinkage in energy imports. We reckon both “core” exports and imports might have moved to positive territory in February.
Cosmo is now very confident that EM is in risk-on mode, with Turkish assets likely becoming major beneficiaries. Political “fat tails” could derail the rally, but the big risk the appointment of CBRT head in mid-April.
Now read on...
Register to sample a report