Cancellation of CHP congress in Istanbul shakes markets

The court's decision to cancel the CHP Istanbul Provincial Congress and remove the current administration from office triggered an immediate reaction in the markets. This development caused stocks on Borsa Istanbul to lose value, while there was also volatility in the foreign exchange and bond markets. As two-year government bond yields increased, the five-year credit default swap (CDS) rose, indicating a deterioration in the market's risk perception.

BBVA London Strategist Tufan Cömert stated, "This decision has reminded the markets of political risks that were beginning to be forgotten during the summer months but were expected to come to the agenda in September." While Gürsel Tekin has been appointed to the CHP's new provincial administration, it is noted that the party has recently been facing judicial pressure. Ongoing cases against Istanbul Metropolitan Municipality Mayor Ekrem İmamoğlu and other CHP figures are putting the party in a difficult position. The most critical hearing will be held on September 15, where the potential cancellation of the 2023 CHP Grand Congress will be discussed. If the court issues a cancellation ruling, the position of CHP Chairman Özgür Özel could also be at risk.

In the past, the arrest of Ekrem İmamoğlu in March caused a shock in the markets, the Turkish Lira lost value, and the Central Bank was forced to raise interest rates. Since that date, Turkish assets have continued to remain vulnerable to political developments.

News Source: 12punto