This weekend’s election in Turkey may be a lose-lose scenario for investors.
If President Recep Tayyip Erdogan and his AK Party’s alliance with the nationalist MHP emerge victorious, investors may see more of the same policies that have hit Turkish assets hard in recent months. But if the alliance loses, there will be uncertainty over whether the inexperienced opposition will be able to fix the economy and improve ties with the West.
“Turkish financial markets have tended to react positively
to an Erdogan/AK Party victory as investors saw it as a sign of
political stability – but this time around the markets are
likely to be more jittery,” Jason Tuvey, an emerging-market
economist at Capital Economics in London, told Bloomberg.
Erdogan needs at least 50% of the vote to win in the first-round presidential poll on June 24. If he fails, he’ll be forced into a July 8 runoff with the most successful opposition candidate, most likely Muharrem Ince of the secular Republican People’s Party (CHP).