Turkish fright: Politics creates big domestic divisions - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that a sizeable current account deficit (around 4 ½% GDP), which is financed by portfolio capital inflows more than direct investment, has long been the Achilles Heel of Turkish asset markets.

Key Quotes 

“Too vulnerable to international investors’ nerves when the central bank lets inflation get too high or when the domestic political situation gets too uncertain. As with the UK referendum, and the US Presidential election for that matter, Turkish politics creates big domestic divisions, and while a more authoritarian and less western-focused regime is more likely than lasting instability, it won’t help the economy There will risk aversion, spreading from Turkey more broadly, but the market reaction will probably be measured. Turkey is at the very bottom of the list for stress from upcoming corporate sector debt repayments.”