TV Blackout For Erdogan Opposition As Turkey Vote Looms; Goldman On What To Expect Tomorrow

Presidential and parliamentary elections will be held concurrently in Turkey on Sunday, with the results likely to start emerging on Sunday evening. In the presidential election, opinion polls suggest that President Erdogan is likely to fall just short of the 50% required to win in the first round (implying a second round run-off on July 8). In the parliamentary elections, opinion polls also point to a close result, with a high probability that the incumbent AKP-led Cumhur Alliance could lose its majority.

While victory is likely for Erdogan (as we detailed here), as Live Oak Capital’s Brad Hoff notes below, Erdogan is utilizing all his state powers to ensure his own success…

AKP President Recep Tayyip Erdogan and Republican People’s Party (CHP) challenger Muharrem Ince.  Image via Hurriyet

Bloomberg reports “State TV TRT gives no air time to opposition’s Istanbul rally” while multiple sources confirm a television blackout for the Republican People’s Party (CHP) candidate Muharrem Ince as Erdogan’s rival continues to reportedly draw immense crowds. 

Screenshot of CHP candidate Muharrem Ince Saturday rally on the Asian side of Istanbul. 

Both are in Istanbul a day ahead of Sunday’s vote widely considered the most important in recent Turkish political history — a crossing the Rubicon moment for Erdogan as he stands to inherit an unprecedented and likely irreversible level of sweeping executive authority. 

We noted previously that Muharrem Ince’s political rallies in major cities this week have drawn shockingly large crowds, a worrisome sign for incumbent President Recep Tayyip Erdogan, who called for Sunday’s snap election at a time when the economy was stronger and as he likely felt unbeatable. 

But multiple international outlets are noting that while Erdogan is still favored to win, a noticeable surge in popular discontent at runaway inflation and a tanking economy, as well as the conservative AKP party leader’s enabling of nepotism and corruption on a mass scale, is bringing a cross-section of Turks to the streets in support of secularist CHP contender Ince. 

For example, Ince’s Wednesday rally in Izmir included a crowd size estimating in range from 300,000 up to several million, depending on the media source commenting.

Bloomberg describes the scene in Istanbul on Saturday:

President Recep Tayyip Erdogan’s biggest rival appealed to a massive rally in Istanbul in the campaign’s final hours. You just wouldn’t know it watching state television.

Muharrem Ince, a 54-year-ld former physics teacher, addressed what his CHP party claimed was a crowd of 4 million in the Maltepe district on the Asian side of the Bosphorus. But the government’s TRT Haber stayed with its regular programming, interrupting it only when Erdogan addressed smaller groups in his travels around Istanbul.

Bloomberg explains further of early polling that:

Erdogan remains the clear frontrunner in Sunday’s presidential election. But most polls show him short of the 50 percent needed for a first-round win — opening the way for a runoff in which an ‘anyone-but-Erdogan’ candidate stands a chance. The president’s AK Party also risks losing its majority in the parliamentary vote the same day.

But Sunday’s vote is one Erdogan can’t afford to lose and as we noted previously he has carefully put the architecture in place for this moment: 

The Supreme Electoral Council, the judicial system, and the military — until recently Erdogan’s most dedicated nemesis — are all now under Erdogan’s control. The military was completely denuded of its higher ranks following the July 2016 failed coup attempt…

…The national press, meanwhile, is completely dominated by Erdogan’s acolytes. The results are unsurprising: In the last two weeks of May, a study demonstrated that the president and his party received far more coverage on three government-owned television stations, including a Kurdish-language one. — Foreign Policy

The opposition has increasingly relied on social media channels on platforms like YouTube, Twitter, and Google to overcome the media blackout. However, state censors have had these blocked in the past as well. 

So what will happen tomorrow?

via Goldman Sachs,

Turkey’s elections: Opinion polls point to a close result

Turkey will hold presidential and parliamentary elections on Sunday, June 24. Voting will close at 5:00pm local time (3:00pm London time) and preliminary results will be announced on Monday. However, unofficial results are likely to be available on Sunday evening on media outlets. In the event that no presidential candidate achieves more than 50% of the vote in the first round, the two candidates with the largest number of votes will face a run-off on Sunday, July 8.

The election will complete the transition to the new presidential system, with extensive new powers vested in the executive. Unlike previous Turkish elections, this time parties have been able to form alliances, with the 10% threshold for parliamentary representation applying to the alliance as a whole rather than to individual parties. In Exhibit 1, we summarise the policy positions of the government (Cumhur) and opposition (Millet) alliances on key issues.

Exhibit 1: A summary of the government (Cumhur) and opposition (Millet) key policy positions

Note: Not all parties in each alliance subscribe to all of these policies, but they represent our best summary of the alliances’ overall views

Source: Goldman Sachs Global Investment Research

The latest polling data point to a close outcome in both the parliamentary and – potentially – the presidential elections. In the presidential elections, President Erdogan has a clear lead over his rivals but most polls indicate that he will fall short of the 50% required to win in the first round.

If the presidential election goes to a second round, polling data point to a close run-off, but a likely Erdogan victory against Muharrem Ince, of the centre-left/secular CHP (Republican People’s Party).

In the parliamentary elections, polling data suggest that the incumbent AKP-led Cumhur Alliance stands a significant chance of losing its parliamentary majority and the key to the outcome appears to be whether the pro-Kurdish HDP party – the only major party not running as part of an alliance – passes the 10% threshold required for parliamentary representation.

For financial markets, each of the likely outcomes comes with associated risks.

In the past, Turkish assets have responded positively to political events that were perceived as increasing political stability, while responding negatively to political instability (Exhibit 2).

Exhibit 2: Asset prices tend to react positively to the perception of political stability in the short run

Turkish asset prices one day/week after political events

Source: Goldman Sachs Global Investment Research

Viewed from this perspective, a win for the AKP in both the presidential and parliamentary elections would be the most stable outcome. However, President Erdogan’s comments on monetary policy during the election campaign – advocating lower interest rates and indicating that he would play a more active role in monetary policy – have raised concerns over the future direction of monetary policy in the event of this outcome.

Though one glance at the current state of Turkish stocks, debt, and FX signals this is a considerable concern…

A split government (with Mr. Erdogan as President and the opposition obtaining a majority in parliament) would likely represent the most negative outcome for Turkish assets, in our view, as it would imply political instability and high levels of uncertainty over the future direction of monetary policy.

An opposition victory in both elections would also bring significant challenges, not least the task of forming a new government and agreeing on a cohesive legislative programme. However, under the assumption that these challenges can be overcome, we would expect it to be the most market-friendly scenario in the medium term.

 

via RSS https://ift.tt/2Mjk399 Tyler Durden

Leave a Reply

Your email address will not be published. Required fields are marked *