Turkey falls out of favour

Turkish stocks have tumbled from their May highs as investors give Turkey the cold shoulder.

"The days when Turkey was considered a market darling are over," says Mert Yildiz of Burgan Bank. The Turkish stock market has slumped by a third from its record peak in May. And the Turkish lira has fallen to a record low against the dollar.

So what's gone wrong? Investors are taking a closer look at Turkey's vulnerabilities because the global backdrop has become less favourable. Once the Federal Reserve signalled in spring that there would be less money printing and, eventually, higher interest rates in the US, risky assets such as emerging markets looked less attractive. They seemed especially unappealing if they had relied to a large extent on foreign cash to underpin growth.

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