Local investors have used Turkey’s stock market as a hedge against the country’s runaway inflation and government attempts to 'lira-ise' the economy. The market's strong performance is almost entirely due to the government’s unorthodox management of the economy, particularly the Central Bank (TCMB)’s politically driven interest rate cuts against the backdrop of high inflation.
Pre-election government spending promises will weaken Turkey’s economic outlook and boost retail investor stock market activity.
Market pressure on the lira after the election could result in monetary and fiscal tightening, which could trigger a stock market collapse.
Falling asset prices would feed through into the real economy, slowing economic growth and potentially causing a recession.
