Domestic analysts predict 'weak yes' in Turkish referendum

Sept. 8, 2010

Turkish analysts speaking to business daily Referans, have predicted a 'weak yes' in Turkey's Sept. 12 referendum, meaning a ratification of 55 percent or less. Analysts continued to say that the markets are interested in signals regarding the continuation of power for AKP, not in the content of the constitutional amendments.

"The market has priced in a 'weak yes,' as opposed to a strong one that would see more than 60 percent voting for constitutional reform," Referans said. "Investors are looking into the possibility of a continuation of the single-party government, rather than the contents of the constitutional package."

Both the international and domestic market are hoping for a 'yes' vote, even if it is a weak one.

Analysts said this would create a buffer in the domestic market against financial shocks form abroad.

Speaking to Hurrieyet Daily News, Fatih Keresteci, Treasury Strategist at HSBC Turkey, says the referendum was important for the market in the sense of what it may suggest regarding the continuation of AKP in government.

"To emerge as the single government once again at the July 2011 general elections, the AKP has to get at least 40 percent of the votes," Keresteci said. "Subtracting 5 percentage points from the ‘yes’ votes on Sept. 12 could provide an estimate on the general election’s outcome. A 'yes' above 45 percent would point toward the continuation of the AKP rule and would thus be perceived positively by the markets."