Asia Unhedged was bullish on Turkey until the end of August, at which point President Erdogan appeared to have painted himself into a geopolitical corner. We’ve been wary of Turkey since then, and observe that in US dollar terms, the Turkish stock market has lost 16% since its peak, well past a correction and bordering on a bear market.

In January everyone wanted President Erdogan to succeed; Washington wanted him to remain inside NATO, the Europeans wanted him to staunch the flow of refugees (which he had backhandedly encouraged in 2015), and the Russians wanted his help in neutralizing Sunni jihadists, whom Erdogan had helped off and on. China wanted Turkey to be the western terminus of its One Belt, One Road infrastructure project.

In the interim Erdogan has made rather a nuisance of himself. His quasi-open alliance with Iran, spurred by the threat of an independent Kurdish state on his border, has angered the Trump Administration, which now is in full diplomatic dudgeon. Erdogan’s agreement to purchase the Russian S-400 air defense system, moreover, is a message that NATO doesn’t matter.

In short, Erdogan overplayed his hand. The mutual scaling back of visa services to American and Turkish citizens today, which triggered the days’ free-fall in Turkish assets, is another example. Given Erdogan’s personal eccentricity it’s hard to know when the situation will normalize, so we prefer to watch Turkish markets from a safe distance.