Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Currencies

Erdogan hints at extending emergency rule


Posted on September 29, 2016

Turkish President Recep Tayyip Erdogan delivers a speech during 27th Mukhtars (local administrators) meeting at the Presidential Complex in Ankara on September 29, 2016. / AFP PHOTO / ADEM ALTANADEM ALTAN/AFP/Getty Images©AFP

Recep Tayyip Erdogan said even a 12-month extension of the emergency powers might ‘not be long enough for Turkey’

Recep Tayyip Erdogan, Turkey’s president, has indicated he could seek to extend his emergency powers indefinitely, driving the currency down past the psychological threshold of three lira to the dollar.

“I believe the nation will support an extension of the emergency rule,” Mr Erdogan said in Ankara on Thursday. He added that even a 12-month extension might “not be long enough for Turkey”.

    His comments suggested he was preparing to reverse promises made to investors and the Turkish public. Mr Erdogan had said the 90-day state of emergency implemented after a failed coup in July was a temporary measure designed to flush out coup plotters.

    The lira, which plummeted at the beginning of the week after Moody’s downgraded the country’s credit rating to junk status, fell further to 3.007 to the dollar on Thursday, highlighting investors’ concerns that the economy was being held increasingly hostage to politics.

    The emergency powers, due to expire around mid-October, allow Mr Erdogan to rule by decree and make decisions that cannot be overturned by the Constitutional Court, the country’s highest legal body.

    Mr Erdogan has already targeted the court, removing two of its members, in a sweeping crackdown on officials suspected of allegiance to Fethullah Gulen, a self-exiled cleric he blames for the failed putsch.

    Since placing the country under emergency rule, the government has jailed tens of thousands of people, and accused more than 100,000 citizens — from doctors and teachers to journalists and military commanders — of colluding with Mr Gulen.

    The government has also seized dozens of businesses, accusing their owners of funding Mr Gulen’s activities.

    “These developments indicate that the government is increasingly becoming dependent on a ‘crisis mode’ to manage day-to-day activities,” said Mujtaba Rahman, an analysts at Eurasia Group. “But although the state of emergency affords Mr Erdogan more powers, his dependence on it indicates his sense of vulnerability — Mr Erdogan calculates that he has less to gain and more to lose by giving up his de facto powers.”

    Both Moody’s and S&P Global Ratings have cited political instability and an erosion of institutional strength as factors that caused them to strip Turkey of its investment-grade status, as well as slowing economic growth and high debt levels.

    Mr Erdogan said Moody’s rating cut was “like revenge on him”.

    “No one in Turkey or abroad took the rating cut seriously,” he said. “Cut whatever you can — Turkey’s reality is different.”

    The fate of Turkey lies in Erdogan’s hands

    James Ferguson

    His priority is not Isis but the Gulenists and Kurdish insurgents, writes David Gardner

    Turkey’s economy, which was one of the world’s better performing emerging markets before the coup attempt, has already cooled and it is unlikely to meet the government’s growth target of 4.5 per cent for the year. In the second quarter, the economy expanded 3.2 per cent, which was lower than forecast.

    Mr Erdogan has cut interest rates and encouraged consumer spending. But tourism, a critical sector, continues to struggle, with foreign arrivals down more than a third in August, while the current account deficit has widened to more than 4 per cent of gross domestic product.

    Fitch, the third major rating agency, is due to announce its decision on Turkey’s credit rating early next year. A downgrade from all three agencies would trigger the selling of Turkish assets, raise banks’ borrowing costs and increase pressure on the lira.

    Mr Erdogan thanked Turks for converting as much as $12bn of their personal holdings into lira since the coup attempt, citing it as evidence of their support for him. But as the currency has weakened, Turks have started buying back dollars — as much as $3.5bn in the past two months — placing additional pressure on the lira.