Turkish stocks and currency took a hit on Monday after the ruling Justice and Development Party (AKP) failed to get a majority in parliamentary elections, and analysts warned of a turbulent ride ahead.
The Turkish lira hit a record low of 2.8094 to the dollar on Monday, and Istanbul's stock exchange opened over 8 percent lower, after it became clear that President Tayyip Erdogan's AKP party had fallen short. By 10.45 a.m. the lira was trading around 2.75 to the dollar, and the stocks were 6 percent lower.
Erdogan had hoped the party he'd founded would get two-thirds of the vote – enough to allow it to change Turkey's constitution and enable him to consolidate his hold on power.
But with almost all of the votes from Sunday's election counted, the results showed that the AKP had won 40.9 percent of the vote (compared with 49.8 percent in 2011), giving the party 258 seats in the Grand National Assembly -- 18 short of a majority, according to Turkish news agency Anadolu.
Read MoreTurkey's ruling party falls short
William Jackson, senior emerging markets economist at research firm Capital Economics, said the political uncertainty brought about by the vote added to an "already ugly picture" in Turkey.
"The loss by Turkey's AK Party of its parliamentary majority for the first time since 2002 makes President Erdogan's desire to change the constitution to strengthen the presidency a pipe dream and should in time help to dampen concerns about an increasingly authoritarian streak to policymaking and a more general diminution of checks and balances on government," he said in a note Monday.