Week Ahead: Turkish vote, China GDP & UK retail sales
Turkish Referendum
The Turkish referendum on April 16th is going to be the major highlight of the weekend. Turkish citizens will say ‘yes’ or ‘no’ to a constitutional change, including 18 amendments which will consolidate the authoritarian President Erdogan’s power at the heart of the government.
While a ‘no’ vote could trigger a relief-rally across the Turkish lira and lira denominated assets, the market reaction to an eventual ‘yes’ vote is unpredictable. A ‘yes’ victory could bring along a sharp sell-off at Monday’s open, yet a downside squeeze could also attract anti-establishment, dip-buyers and result in a rebound, as has been the case following the US election.
Although the accuracy of the market polls are questioned, Reuters has reported that a ‘yes’ vote may have slightly taken the lead. As such, Turkey could open a new page in its modern history on Monday.
LCG’s Senior Analyst Ipek Ozkardeskaya highlights that two-sided volatility is likely to be on the menu on Monday, as uncertainties regarding both results would reveal many questions.
Even though some interpret ‘yes’ as a continuation of Erdogan’s actual empowerment, an eventual regime change could squeeze the country’s fundamentals, hence reshuffle the valuation of Turkish assets and the lira in the medium to long term. On the other hand, there are rising speculations that a no vote could be followed by another referendum. If this is the case, the anticipated relief rally of an eventual ‘no’ vote could rapidly be replaced with a tenser mood in the short run.
Click here to read the full article on LCG.com
Turkish Referendum
The Turkish referendum on April 16th is going to be the major highlight of the weekend. Turkish citizens will say ‘yes’ or ‘no’ to a constitutional change, including 18 amendments which will consolidate the authoritarian President Erdogan’s power at the heart of the government.
While a ‘no’ vote could trigger a relief-rally across the Turkish lira and lira denominated assets, the market reaction to an eventual ‘yes’ vote is unpredictable. A ‘yes’ victory could bring along a sharp sell-off at Monday’s open, yet a downside squeeze could also attract anti-establishment, dip-buyers and result in a rebound, as has been the case following the US election.
Although the accuracy of the market polls are questioned, Reuters has reported that a ‘yes’ vote may have slightly taken the lead. As such, Turkey could open a new page in its modern history on Monday.
LCG’s Senior Analyst Ipek Ozkardeskaya highlights that two-sided volatility is likely to be on the menu on Monday, as uncertainties regarding both results would reveal many questions.
Even though some interpret ‘yes’ as a continuation of Erdogan’s actual empowerment, an eventual regime change could squeeze the country’s fundamentals, hence reshuffle the valuation of Turkish assets and the lira in the medium to long term. On the other hand, there are rising speculations that a no vote could be followed by another referendum. If this is the case, the anticipated relief rally of an eventual ‘no’ vote could rapidly be replaced with a tenser mood in the short run.
Click here to read the full article on LCG.com