US and Turkey conflict remained front of mind this week - Westpac

According to Elliot Clarke, Research Analyst at Westpac, conflict between the US and Turkey has remained front of mind for the press this week and is a highly uncertain situation, which is unlikely to be resolved soon.

Key Quotes

“We are not overly concerned by the effect this situation will have on global trade or growth, but we are mindful of potential spill-over effects to the European banking sector (who have considerable exposure to Turkish corporates) and to sentiment towards other emerging markets.”

“Developing nations geographically near Australia are in a far better situation than Turkey and where they were in the late-1990’s (based on current account and external debt metrics). Hence a real economy and/or emerging market financial market contagion in our region is highly unlikely.”

“Still, amid uncertainty, market participants are likely to sit on the sidelines until the data confirms there is no need for concern.”