(Harvest) The failed July 15 coup in Turkey served as a useful reminder to investors that emerging market equities, which have been far outpacing major advanced country stock indexes nearly seven months into the year, are clearly prone to political risk and market volatility. But then again, as the surprise outcome of the U.K.’s June 23 “Brexit” vote to leave the European Union, or the twists and turns in the U.S. primary election season have also shown, political risks always lurk around the corner, the world over. For investors, the answer to managing political risk is to analyze its implications against the potential rewards. If an eruption in political risk causes assets prices to tank, has the market appropriately valued them, relative to their intrinsic growth prospects?
Political Risk Spikes in Turkey, Roiling Asset Prices
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