Turkish stocks, bonds and the Turkish Lira may decline should Prime Minister Recep Tayyip Erdoğan’s Justice and Development Party, or AKP, increase its share of the vote to win a two-thirds majority at parliamentary elections in less than two months time, Royal Bank of Scotland Group said.
“Markets generally are fearful that armed with a two- thirds constitutional majority the AKP will push ahead with controversial constitutional reform, moving Turkey more to a presidential system of government, with the centralization of more power in the hands of prime minister, perhaps even president, Erdoğan,” chief emerging markets economist Timothy Ash said in an e-mailed report to clients on Wednesday. The “market sweet spot” is “the maintenance of the status quo,” he said.
Erdoğan’s party leads the Republican People’s Party, or CHP, by an average of 21 percentage points in three polls by MetroPoll, Konsensus and Iksara published between March 10 and March 25. That would translate into a third consecutive parliamentary majority should the results be repeated on June 12.
Erdoğan needs two-thirds of seats in the 550-member parliament to change the constitution without the support of opposition deputies.