Turkish stocks fall as lira tumbles following election result

 
Emma Haslett
Follow Emma
Liberal Turks showed their disillusionment by voting against Erdogan's AK Party (Source: Getty)

Turkish stocks fell more than eight per cent as the market opened, after voters gave a decidedly cool reception to the AK Party, which lost its parliamentary majority in the country after 13 years.

The Turkish Borsa 100 later regained some of its losses, although it was more than six per cent down in early morning trading.

Meanwhile, the Turkish lira was down 4.11 per cent against the dollar, at $0.3602, and 4.34 per cent against the euro, at €0.3232.

The election result left President Recep Tayyip Erdogan scrabbling to form a coalition after winning just 258 seats, 18 short of the number needed for a majority. Meanwhile, the pro-Kurdish People's Democratic Party hit 13 per cent of the vote.

Erdogan now faces the task of forming a coalition within the next 45 days, as required by the constitution - not easy, given all three of the country's major opposition parties have indicated they will not form an alliance with the AK Party.

Marshall Gittler, head of global FX strategy at IronFX, suggested Turkish markets are in for a prolonged period of uncertainty.

The reluctance of the opposition parties to form an alliance means a "short-lived minority government is the most likely outcome", he said.

"Given the prospect of increased political instability and uncertainty about economic policy, I would not want to try to catch this falling knife."

Related articles