Turkey Extends Crackdown on Dissent to Analysis by Brokers

Turkey Extends Crackdown on Dissent to Coup Analysis
  • Capital Markets Board files criminal complaint over report
  • Ak Investment strategist accused of insulting Turkish leader

Turkey is widening its crackdown on dissent to include comments on the damage caused by the failed coup of July 15.

The head of research at one of Turkey’s largest brokerages was stripped of his license over a report analyzing the impact of the putsch. The Capital Markets Board said Mert Ulker failed to “fulfill his responsibilities” in publishing his analysis for Ak Investment, the brokerage arm of Turkey’s second-largest bank. He also faces criminal charges, including under articles of the penal code against insulting the president, the nation or its institutions.  

The country of 79 million people joins a growing list of emerging markets that invoke censorship in the name of national security. China, which pays millions of people to monitor content critical of the government, this month banned several internet companies and portals from posting original news stories. And in Argentina, former President Cristina Fernandez restricted independent inflation estimates before her 2011 re-election bid.

“Turkey has always done well from being an open, transparent economy, at least with regards to data, but emerging market investors need to feel that they can get a sense of the politics as well,” said Charles Robertson, the global chief economist at Renaissance Capital Ltd. in London. “If not, Turkey risks losing the financing it needs to cover its current account deficit.”’

Turkey relies on international investors for growth, as it needs the equivalent of 25 percent of its gross domestic product in external funding per year, according to estimates by Moody’s Investors Service.

Battling Negativity

Ulker, who was also chief strategist at the broker, is the latest casualty in a sweeping purge that has cost thousands of bureaucrats, educators and security personnel their jobs since the failed coup, which left more than 250 dead.

Turkish officials are asking banks to hand over their analyses of the putsch, with Mehmet Ali Akben, the chief banking regulator, warning against publishing “reports that would turn expectations and the atmosphere negative.” Authorities detained Petkim Petrokimya Holding Chief Executive Officer Sadettin Korkut and suspended more than 200 staff members, the state-run Anadolu Agency reported.

The Capital Markets Board delisted Via GYO, a Turkish real estate fund, because of alleged ties with the Gulen movement. President Erdogan holds Fethullah Gulen, an Islamic preacher based in the U.S., responsible for the coup attempt and is seeking his extradition. Via GYO denied any links with the group.

Punishing Analysts

In its statement announcing Ulker’s punishment Wednesday, the Capital Markets Board didn’t say whether Ak Investment’s status was affected and declined to comment further. Ulker couldn’t be reached on his cellphone following the statement.

“Mert Ulker’s contract with Ak Investment has been canceled as of July 25, Monday, and since then he is no longer an employee,” Ak Investment Chief Executive Officer Mert Erdogmus said by phone.

Punishing analysts is likely to backfire, according to Ghanem Nuseibeh, the founder of London-based risk consultancy Cornerstone Global Associates.

‘Pinch of Salt’

“Everything that comes out of Turkey will now be taken with a pinch of salt,” Nuseibeh said by telephone on Wednesday. “If this environment persists, Turkey will reach a point where confidence in its financial sector and economy will crumble, as far as foreign investors are concerned.”

In a 2,750-word report published on the Monday after the failed coup attempt, Ak Investment summarized the most recent developments and offered forecasts for the Turkish lira, stocks and the economy. It also analyzed the likely trajectory of Turkish politics, saying developments had “resulted in more power being concentrated in President Erdogan’s hands."

One section of the report outlined various explanations of who was behind the attempted overthrow, addressing speculation that it could have been a so-called false flag, “stage-managed to give President Erdogan an opportunity to purge the military of opponents and extend his grip on Turkey.” The report downplayed that explanation as not being the most “rational” possibility.

Self-Censorship

Some brokerages with operations in Turkey are scaling back their commentary as a result of the coup attempt. At least five brokerages, which cited regulator requests for their research as well as investigations into their e-mail traffic, declined Bloomberg requests for comment this week.

The regulator’s ruling institutionalizes a culture of self-censorship that was already widespread and will undermine the credibility of the nation’s brokerages, according to Nathan Griffiths, who helps oversee about $1.1 billion as a senior money manager at NN Investment Partners in The Hague.

“In practical terms, it means I have little interest in reading research from local brokers because they are effectively unable to offer balanced commentary,” Griffiths said. “It’s terrible for the integrity of the Turkish brokerage community.”

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