Markets dip as possibility of early elections looms
Posted by meb at April 28th, 2007
The İstanbul Stock Exchange (İMKB) closed on Friday after a sharp decline of 2.02 percent amid discussions that the first round of the presidential elections had been attended by less than 367 deputies, a condition claimed by the main opposition Republican People’s Party (CHP) as the necessary quorum for the elections to be valid.
Another major reason behind the fierce fall, however, was the weak growth data of the US gross domestic product (1.3 percent), in the first quarter. The İMKB 100 Index was at 46,861.31 points when it closed Friday, after a 964.74-point decline. Ata Investment Trust General Manager Osman Büyükgöksu explained what he called the “hard movement” in the stocks as a consequence of the investors’ perception that the less-than-expected participation was a surprise.Markets started the day in a cautious mood, awaiting the outcome of the first round of the presidential elections. The first round ballot, to determine whether Foreign Minister Abdullah Gül will become Turkey’s next president, was at the top of the agenda of the markets, and investors wanted to see the smoke clear from the ambiguity stemming from CHP’s threats to take the ballot to the Constitutional Court if an alleged quorum of 367 deputies weren’t gathered at the Parliament.
The stability of the currency market continued until midday and the YTL hinted no direction. It wavered, yet seemed to gain strength in the morning as the signals of an early election became stronger after Prime Minister Recep Tayyip Erdoğan said that the government was ready for the possibility of elections before November. The YTL ended the day around 1.334 against the dollar in the inter-bank market. A treasury official from a national bank commented that “although the possibility of an early election is a source of ambiguity in the short term, it is perceived as a positive incident since it will support budget targets and clear the ambiguities in the middle term.”
Mehmet Ağar, head of the True Path Party (DYP) and Erkan Mumcu, leader of the Motherland Party (ANAVATAN), announced minutes before the ballot that they would not participate in the presidential election. According to the Constitution, a nominee has to get at least 367 votes to be elected president in the first round of voting. If he or she achieves less than that in the first two rounds, an absolute majority is sought in the last round.
During and after these declarations from the opposition parties, markets reacted immediately and the İMKB 100 Index fell sharply by more than 550 points.
source: Today’s Zaman
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