Instant view: Turkey's Erdogan on track to win election

Reuters News
Posted: Jun 14, 2011 3:20 AM
Instant view: Turkey's Erdogan on track to win election

ISTANBUL (Reuters) - Prime Minister Tayyip Erdogan's ruling AK Party was set to win a decisive victory in Sunday's parliamentary election to earn a third successive term of single-party rule.

With 95 percent of the vote counted, results showed the AK Party winning 50.4 percent of the vote, or a projected 326 seats in the 550-seat assembly, below the 330 needed to call a referendum on a planned new referendum.


* Support for the second-largest Republican People's Party (CHP) was put at 25.8 percent, or 136 seats.

* The Nationalist Movement Party (MHP) was on 13.1 percent, or 53 seats, exceeding a threshold of 10 percent which parties must meet to enter parliament.

Following are comments from analysts, investors and politicians on the election result:


"The elections being completed have increased the government's legitimacy for investors. Results show that financial risks are ahead of political risks. We hope and expect that the balance in the parliament will decrease the level of political risks and will not cause concerns for investors.

"Turkey's credit rating may be upgraded if Turkey's basic funding structure and financial stability in growth model are strengthened. Turkey being upgraded to investment rating or not will be determined by fiscal and political stability, regardless of the elections. We will have to wait to see the direction of policies, the 2012 central government budget and foreign trade approaches."


"If the result comes as the way it is now, it is the ideal from an international investors' point of view that AKP has a solid power base, but short of two-thirds.

"From an international perspective it looks like the most bullish scenario.

"There is a good chance of a relief rally of the lira ... on account of international investors being relieved by this scenario.

"This will be bullish for all the Turkish assets, fixed income and equity as well.

"It paves the way for the opportunity on the part of the authorities to tighten policies. We would like to see more fiscal discipline, this can be achieved after elections. The ideal scenario would be to see even the central bank to do some tightening as well."


"The results seem slightly negative for the market. It seems the number of MPs won't change significantly, and may not influence the markets so much. On the stock market, we may observe some buying from local investors as AKP has increased its percentage of votes. I think the effect of elections may be very short-timed and limited. We will continue monitoring foreign markets, we may even argue tomorrow's current account deficit data will have more impact on the market than election results. The markets may perceive the number of AKP seats between 300-330 as softening in politics and may react positively."


"It is clear-cut that AKP will be able to form a single-party government but not achieve the supermajority of 367+ seats (required to pass constitutional amendments straight into law).

"It seems the election outcome is heading toward the best-case scenario for the markets: a solid majority for AKP but short of the 330+ seats required to amend the constitution and put it to a referendum. Falling short of 330 seats, the AKP would be forced to enter into negotiations with the opposition for the desired changes: a scenario that should help to limit the risk of further polarization."


"The elections were held in peace, which is pleasing. Our people have proved their power by not voting for the government despite all its financial promises and benefits, by backing us, who are ready to solve the Kurdish problem. I think this is a message that needs to be read well. Our people want the Kurdish issue to be solved through peaceful and democratic methods. We will work for it, and will struggle to meet the demands of Kurdish people with the new constitution.

"This is a huge success for us. We expect the PM to signal a strong hope for the solution of the Kurdish problem for Turkey's future."

(Reporting by Pinar Aydinli, Ece Toksabay, Daren Butler, Nevzat Devranoglu, Editing by Sonya Hepinstall)