Turkey: Egypt a mixed blessing? | beyondbrics – FT.com

The flow of protestors in Cairo’s Tahrir Square have unsettled markets across the region. In Turkey, investors already had doubts over the central bank’s unorthodox policy initiatives. Egypt’s intensifying political crisis swung sentiment against emerging markets, hitting the lira and prompting a sharp sell-off in Turkish equities and bonds.

“There’s a general feeling that the CBT [Turkish central bank] could not have picked a worse time to experiment,” said Nicholas Spiro, at the consultancy Spiro Sovereign Strategy, while analysts at the brokerage EFG Istanbul Securities said the “safe-haven credentials” of Turkish assets had “no doubt taken a bit hit”.

Yet asset prices are already rebounding, and analysts speculate that a period of prolonged instability in the Middle East could boost Turkey’s weight in regional affairs – and its attractions for international investors.