Turkey’s election: potential outcomes and market implications

Fears ahead of Turkey’s parliamentary election on 7th June have centred on the risk of a dominant and increasingly authoritarian AK Party under President Erdogan, but in another twist to the plot the latest opinion polls suggest that the election might result in a hung parliament. It’s possible that the markets would perceive a hung parliament as preferable to a thumping victory for the AK Party, not least because it might derail Mr. Erdogan’s ambition to change the constitution to strengthen the presidency. But even so, it’s hard to see an election outcome that would be market-friendly.