The recent outperformance of Turkish equities - in line with a tactical view we put out in February on account of extreme bearish sentiment, cheap valuations, and oversold technical conditions (see 'Technical Picure Points To Gains Across Asset Classes', June 2017) - is coming up against rising downside pressure and we no longer expect continued outperformance.
Turkey's April 16 referendum will move the country's system of governance in a more autocratic direction, with negative implications for EU relations and long-term growth. The close and contested nature of the result will keep political and societal tensions high, with the 2019 general elections already coming into focus.
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Thanks, BMI Research