Turkish markets rally as key economic figures keep posts in new cabinet

By bne IntelliNews May 24, 2016

Turkey’s newly appointed Prime Minister Binali Yildirim, a close ally of President Recep Tayyip Erdogan, announced a cabinet on May 24 that came as a relief to nervous investors by keeping key members of the economic management team.

While nearly half of the government was reshuffled in a sign Erdogan is tightening his grip, Deputy Prime Minister Mehmet Simsek, who is credited by investors for overseeing structural reforms and Turkey’s economic boom, kept his post along with Finance Minister Naci Agbal. The news sent the lira up 0.6% to trade at 2.98 per dollar. The lira’s gain was the strongest among emerging-market currencies tracked by Bloomberg. The benchmark Borsa Istanbul 100 index gained nearly 2.0%, the most in more than a month.

“Logic prevails – why would Erdogan not keep Simsek, so as to keep markets and investors on side for the time-being and with likely polls looming. Agbal also retained as finance minister, so also re-assuring”, Tim Ash at Nomura said in an emailed note. “Market positive – well keeps the faint hope of Turkish reform open for some time. This is not to say that Simsek will have that much leverage to deliver on his structural reform plan, the power is moving to Erdogan and his less orthodox policy advisers.”

In a sign Erdogan is not wasting any time in taking charge of the government affairs, the new cabinet will hold its meeting at the president’s palace on May 25. Everybody knows who the real boss is, who rules the Justice and Development Party (AKP), but Erdogan still wants to formalise this de facto situation. The division of labour is clear: Erdogan will make the decisions and Yildirim’s cabinet will implement them.

Erdogan hand-picked his long-time ally Yildirim to succeed Ahmet Davutoglu, who was allegedly ousted for allegedly blocking Erdogan’s path to greater power. Yildirim’s main task will be to push through constitutional reforms to give Erdogan more executive powers.

New names to the government include Nihat Zeybekci, who was appointed economy minister. Zeybekci, known as a  figure close to Erdogan, was economy minister in Davutoglu’s government until the November elections, when he was replaced by Mustafa Elitas. During his term as minister Zeybekci had repeatedly called on the central bank to cut interest rates. His appointment suggests pressure on the central bank for further cuts will increase. Zeybekci’s return may also signal the politicisation of economic policy.

However, what investors had feared the most did not happen: Berat Albayrak, Erdogan’s son-in-law, kept his position as energy minister amid speculations that he could have replaced Simsek as the deputy PM in charge of the economy.

AKP’s spokesman Omer Celik has been appointed as the EU minister at a time when Turkey is at loggerheads with the EU over a key migrant deal.  Foreign Minister Mevlut Cavusoglu remains in his post.

 

 

 

 

Related Articles

Richest Turkish families sell conglomerate shares for more than €500mn

Members of families that own Turkey’s two biggest groups of companies sold stakes in their respective groups for a combined sum of more than €500mn as the benchmark Turkish stock exchange index ... more

Turkey's Erdogan renews attack on high interest rates as tool of exploitation

Turkey’s President Recep Tayyip Erdogan on May 24 returned to one of his well-worn favourite themes, renewing his attack on high interest rates. “I clearly say this: I see high interest rates ... more

More arrest warrants issued in Turkey as Erdogan continues to rule by decree

Turkey, which President Recep Tayyip Erdogan continues to govern under an indefinite state of emergency which allows him to rule by decree, on May 24 issued more arrest warrants for people allegedly ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss