Turkey sharply lower after elections

Turkish stocks initially jumped 1.5% following Prime Minister Erdogan's victory in that country's first direct presidential election on Sunday, but ended the day sharply lower, the Istanbul 100 Index -2.4%.

"The outright victory of Erdogan in Sunday's vote, the first round of Turkey's first popular presidential election, does little to ameliorate the political risk to Turkey's sovereign credit profile," says Fitch.

Erdogan is set to take office for a 5-year term on August 28 amid inflation which has been running for nearly double the government's 5% goal for a couple of years. He also faces a cabinet reshuffle, including the exit of Deputy PM Ali Babacan who has an international reputation for being the country's economy czar. "The risk I see on the short run is that Erdogan decides to reshuffle the cabinet immediately, not waiting until the parliamentary elections, and replace the guys with market credibility," says an emerging markets fund manager.

TUR -3.3%

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