So far, the market’s reaction to Turkey’s historic referendum on the adoption of a national presidential system on April 16 has been positive, with local bonds and the currency rallying. Despite a slim margin, this was a major win for President Erdoğan and the Justice and Development Party (AKP). The results lead to further consolidation of power under Erdoğan, who now controls the media (TV, radio and news), the police and the judicial system.
I anticipated this result would be a favorable outcome for Turkish lira (TRY) and the bond market for the short term as it would eliminate a key lingering political uncertainty. However, longer term this result is likely to be quite negative for Turkey and there are still many questions to monitor.In my view, the extent of the current rally will depend on the outcome of the following factors/risks: Read More