Turkish equities and the iShares MSCI Turkey ETF (NASDAQ: TUR) are struggling this year. TUR, the lone exchange traded fund dedicated to Turkish stocks, is sporting a double-digit year-to-date loss and while some market observers view the market there as inexpensive, that is not helping woo investors.

Last year, Turkish voters voted to disband the country’s parliamentary system and install a strong presidential form of government. That scenario, among others, contributed to strained diplomatic relations between the U.S. and Turkey.

“Just two weeks after markets celebrated President Recep Tayyip Erdogan’s call for snap elections, a move that condensed a period of political uncertainty from 19 months to two, investors are beginning to reconsider the premise of that rally,” reports Bloomberg. “The economy’s still overheating, and analysts are starting to doubt an easy victory for the incumbent.”

Politics At Play in Turkey

Turkey is holding elections again in June. With the country’s penchant for political volatility, the specter of another election could be weighing on investors’ near-term views of the country’s financial markets.

“The announcement came following a meeting between Erdoğan and his parliamentary ally Devlet Bahçeli, chairman of the Nationalist Movement Party (Milliyetçi Hareket Partisi: MHP),” said IHS Markit. “Erdoğan’s party, the Justice and Development Party (Adalet ve Kalkınma Partisi: AKP), and the MHP had recently finalized an agreement to establish a formal election alliance.”

Like many single-country emerging markets ETFs, TUR is heavily dependent on the financial services sector. That sector represents 35% of the ETF’s weight, more than double its second-largest sector weight. Industrial and materials stocks combine for over 32% of the fund’s roster. TUR has an 18.2% weight to industrial stocks.

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