25 Juni 2018, 13:29 GMT
Turkey’s political landscape looks set to remain unchanged following the early elections on 24 June. In the presidential vote, Erdogan won in the first round, securing just over half of the votes, thereby avoiding a second round run-off on 8 July. In the parliamentary elections, the incumbent AKP/MHP coalition alliance retained their majority in the 600-seat assembly.
Following his victory in the April 2017 constitutional reform referendum, President Erdogan has now successfully consolidated his political power with the role of prime minister effectively scrapped and the presidency shifting from a largely ceremonial role to one that enjoys executive powers.
Many of Turkey’s opposition supporters have become frustrated with Erdogan’s pro-Islamist agenda in recent years, which has been seen as a shift away from Turkey’s long held religious secularism. Erdogan’s heavy crackdown on perceived ‘Gulenists’ following the July 2016 failed coup attempt has also had a mixed reaction from the population. In addition, the increased cost of living in recent months has weighed on Erdogan’s support given elevated inflation and sharp weakness in the lira.
However the most popular politician in the country for the past 15 years has extended his long track record of successfully navigating elections. Erdogan’s growth and job creation oriented policies have once again reaped benefits at the ballot box.
Some investors will fear this result will reduce the checks and balances on President Erdogan and further undermine the strength of Turkey’s institutions. However, the Erdogan/AKP victory does avoid the worst case scenario for Turkey where the presidential and parliamentary votes went different ways. That could have signalled a period of deep political instability with policy paralysis and ineffective decision making between the president and the parliament and even the possibility of another early parliamentary election. All eyes will now be on Erdogan’s appointment of ministers and markets will be watching closely if pragmatic reformists are appointed.
With this result, Turkish markets should enjoy a small relief rally given that the political uncertainty has now been removed. However, the medium to long-term picture for Turkey remains challenging and the much-required deep structural reforms are now unlikely to materialise anytime soon. Turkey continues to struggle with many macro vulnerabilities including persistent double digit inflation, a wide current account deficit, a low savings ratio, loosening fiscal policy and a large external financing requirement.
Away from Turkey, the near-term outlook for emerging markets remains challenging as Federal Reserve/ECB balance sheet reduction and liquidity withdrawal will continue for the foreseeable future. Additionally, we feel emerging market currencies are likely to remain under pressure as the US dollar continues to benefit from favourable interest rate differentials, structural market positioning and US tax reforms. Furthermore, emerging markets are also now facing additional headwinds from slowing growth momentum, rising inflation and global trade protectionism.
Lesen Sie mehr
The value of investments and the income from them can go down as well as up so you may get back less than you invest. Past performance is not a reliable indicator of future results.
These materials are provided for information purposes only and are intended only for the person or entity to which it is sent.
These materials do not constitute a distribution, an offer or solicitation to engage the investment management services of Fidelity, or an offer to buy or sell or the solicitation of any offer to buy or sell any securities or investment product.
Fidelity makes no representations that the contents are appropriate for use in all locations or that the transactions or services discussed are available or appropriate for sale or use in all jurisdictions or countries or by all investors or counterparties.
Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. They are valid only as of the date indicated and are subject to change without notice.
This material was created by Fidelity International. It must not be reproduced or circulated to any other party without prior permission of Fidelity.
This communication is not directed at, and must not be acted on by persons inside the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required. Fidelity is not authorised to manage or distribute investment funds or products in, or to provide investment management or advisory services to persons resident in, mainland China. All persons and entities accessing the information do so on their own initiative and are responsible for compliance with applicable local laws and regulations and should consult their professional advisers.
This content may contain materials from third-parties which are supplied by companies that are not affiliated with any Fidelity entity (Third-Party Content). Fidelity has not been involved in the preparation, adoption or editing of such third-party materials and does not explicitly or implicitly endorse or approve such content.
Fidelity International refers to the group of companies which form the global investment management organisation that provides products and services in designated jurisdictions outside of North America Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. Fidelity only offers information on products and services and does not provide investment advice personal recommendations based on individual circumstances.
Issued in Europe: Issued by FIL Investments International (FCA registered number 122170) a firm authorised and regulated by the Financial Conduct Authority, FIL (Luxembourg) S.A., authorised and supervised by the CSSF (Commission de Surveillance du Secteur Financier) and FIL Investment Switzerland AG, authorised and supervised by the Swiss Financial Market Supervisory Authority FINMA. For German wholesale clients issued by FIL Investment Services GmbH, Kastanienhöhe 1, 61476 Kronberg im Taunus. For German institutional clients issued by FIL Investments International – Niederlassung Frankfurt.
In Hong Kong, this content is issued by FIL Investment Management (Hong Kong) Limited and it has not been reviewed by the Securities and Future Commission. FIL Investment Management (Singapore) Limited (Co. Reg. No: 199006300E) is the legal representative of Fidelity International in Singapore. FIL Asset Management (Korea) Limited is the legal representative of Fidelity International in Korea. In Taiwan, independently operated by FIL Securities (Taiwan ) Limited, 11F, 68 Zhongxiao East Road, Section 5, Xinyi Dist., Taipei City, Taiwan 11065, R.O.C. Customer Service Number: 0800-00-9911#2.