Managers: Turkey still faces challenges despite short-term election boost

The Borsa Istanbul index may have rallied over 5% on the back of the Justice and Development Party's (AKP) surprise win in Turkey's general election on 1 November, but fund managers have warned caution is still needed when investing in the country.

Turkey has been one of the worst-performing constituents of the MSCI Emerging Markets index, down 26% in dollar terms during the year to 14 October, as concerns over rate rises in the US, as well as increased border conflicts and political instability have unsettled investors. A few years ago, Turkey looked set for a turnaround, with GDP growth of 8.8% in 2011 on the back of QE-driven investment by foreign investors. However, this fell back to 4.1% in 2013, and 2.9% in 2014. With consumer confidence and employment levels at all-time lows, the country's economy is expected to grow by j...