It is no secret that the AKP are two factions: supporters of President Erdogan (representing the majority) and the being in the minority faction, led by Davutoglu.
In the last days of the conflict between the president and prime minister reached a critical point, and the chance for an agreement in the key areas of state management decreased dramatically. Thus, the announcement of his resignation. In this situation, ensure made by the Prime Minister Davutoglu about the lack of criticism and respectful to President Erdogan sounded for investors extremely incredible.
Changing the position of head of the party, and even the prime minister, it does not seem sufficient reason to trigger that big declines in the financial market. Such situations happen. Why such a strong aversion to Turkish assets?
In addition to the resignation announced by the Prime Minister Davutoglu of Turkey significantly increased risk of re-conduct early parliamentary elections. The third elections over several months would put into question the stability of Turkish democracy. On the other hand, political instability never conducive to investment capital. This can be seen from the example of Russia.
What is the purpose of the ACP would strive for new elections?
It is widely known that Recep Tayyip Erdogan seeks to the strengthening of presidential power. With the current system in the Turkish parliament it is not possible, as the ruling AKP party lacks a constitutional majority to vote on such changes. As it turns out, the pro-Kurdish People’s Democratic Party (HDP) and the extreme nationalist party MHP, which after the recent elections, with good results came to the parliament, they lose their followers.
According to the latest opinion polls support for these groups fell below 10%, which in Turkey is an electoral threshold. If the survey results are reflected in reality and the ACP have won a constitutional majority of the parliament disappear strong opposition, and President Erdogan could push through a presidential system. Markets fear the drift of Turkey towards authoritarian rule.
Is the increased political risk in Turkey reduces good foundation on which so far investors have based their commitment to Turkish assets?
As a result of a sharp increase in political risk in some foundations to support the Turkish shares were temporarily undermined. You can even indicate the stability of the Turkish currency, which until recently hiked the appetite of foreign investors in the Turkish assets. On the other hand, many arguments in favor of Turkey has not changed.
You can even indicate GDP growth forecasted attractive dividend yields and increases the profits of Turkish companies. Until the development of the situation on the political scene to invest in Turkey will be associated with an increased risk.
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