Fear of political turmoil in markets

The markets had been expecting, until a while ago, the political atmosphere to calm down with elections, but it seems that this expectation has been replaced by a period of uneasiness and uncertainty, likely to last a long time. Regardless of the outcome of the elections, it is a dominant expectation that the clashing atmosphere in politics will not settle down in the short term. 

The downing of the Syrian war plane last weekend and the reappearing of war scenarios following this indicate that tensions are mounting, not only in domestic politics but also in terms of foreign relations. When this is added to the increase in the dose of political harshness with the nearing of local elections, it is now evident that it will be an election week that scars the markets.

Also, the expectation is growing that as elections approach serious eavesdropping records that would put the prime minister in a difficult position will be released. This environment, with the debates on the ban on Twitter, has started being monitored much more closely by the international public as well as the domestic one. In other words, even though there are only four or five days left before the elections, what kind of an atmosphere the elections will take place in still remains uncertain and the interest of the international community in the elections looks like it has further increased.

These intense political developments have also unavoidably started affecting the markets. It looks inevitable that within this week, until the elections are held, the markets will take on a fluctuating course.   

Because of the previous anticipation of foreigners that stability will come, in the event that the ruling Justice and Development Party (AKP) wins over 40 percent of the votes there is an expectation that they might opt once again to invest in Turkey. However, recent media bans, especially the one on Twitter, which is the symbol of freedom of expression, have started changing Turkey’s perception in the West. The uneasiness of the Western public because of the government’s stance in the Gezi incidents seems to have further increased.  

Maybe because of the vision of foreign market actors about Turkey and also particularly the United States and the European Union, there are reactions coming from Western centers with a high dose of criticism about the latest developments. With these reactions, the dose of which are constantly increasing, it is obvious that the perception of Turkey politically disintegrating from the West is seriously increasing the uneasiness of the foreign investor.

The political atmosphere has been strained to such an extent that each segment is now aware that this environment will not calm down with elections. As a matter of fact, tension could further rise after elections. The picture becomes graver with the mention of vote rigging discussions in the elections.

Even the appearance of these scenarios, alone, could be regarded as a sign that new debates will emerge with elections. In other words, regardless of who gets how many percent of the votes, a debatable environment is awaiting us.

The new expectation that despite the elections the political clash will continue, naturally, has changed the atmosphere in the markets. From now on, the foreigners will also not be able to make a judgment depending on the vote ratios in the election. For the stability of the markets, the political atmosphere should calm down permanently.