The Tell: Erdogan’s election setback sparks investor uncertainty about Turkey’s lira, financial markets

Turkish President Recep Tayyip Erdogan suffered a blow in local weekend elections, setting the stage for more near-term uncertainty for investors, according to ABN Amro.

Erdogan’s People’s Alliance, comprising the AKP (Justice and Development Party) and MHP, (Nationalist Movement Party), lost control of Ankara, Istanbul and Izmir — Turkey’s three largest cities in terms of population and economic clout.

“While the local elections have no effect on the leadership at a national level, the People Alliance losing the control over the big cities constitutes a clear warning signal that people are not satisfied with the current economic policy of the regime,” wrote Nora Neuteboom, emerging-markets economist, and Georgette Boele, senior currency strategist at ABN AMRO.

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