Turkey: Measures to alleviate market sentiment – RBS

Gabor Ambrus, Research Analyst at RBS, notes that the Turkish policy makers have recently taken a number of measures aimed at alleviating market sentiment.

Key Quotes

“This has in part been achieved through communication, for example: Deputy PM Simsek’s conference calls, more frequent CBT meetings with analysts, trips abroad by local officials, promises of structural reforms, promises of no early elections, and so on.

There has been more than just a change in communication policy though, meaningful steps have been taken to reduce vulnerabilities. In particular, the decision not to intervene in defence of the lira, and yesterday’s announcement of an increase in the size of the export rediscount credit facility, should help rebuild reserves at a faster pace. This is necessary to reduce external financing concerns.

Last week’s measures regarding share buybacks also went some way towards putting a floor under markets. These measures may help markets normalise faster than most anticipate. We are still awaiting details on the infrastructure fund that PM Yildirim announced in an interview on Sunday, but a degree of fiscal expansion to offset the potential economic fall-out from the attempted coup should also be welcome by markets.”