Turkey: stock trading stopped twice when lira fell into new decline Financial Market News

The trading of all listed shares was halted on Friday after the Borsa Istanbul 100 index fell to 7 percent.

Turkey halted trading in all listed shares, after major declines triggered a switch to the entire market, extending lira to record lows.

Shares of repurchases of shares, derivatives and debt were automatically suspended twice within one hour of the Borsa Istanbul 100 index falling to 7%. Trading started again at 17:24 local time and the index fell by 9.1% in the first two minutes.

The index rose 5.6% before sinking earlier, as the intervention of central banks in the money market did not stop the decline of the lira. The currency was under pressure after the central bank cut its benchmark repo rate by 14 percentage points on Thursday, despite inflation accelerating above 21%.

“The full capitulation of shares in Turkey today could be a turning point in local sentiment,” Nick Stadtmiller, director of emerging markets for Medley Advisors, said in an email. “Turkish equities have risen despite a deterioration in the macro background. But now the withdrawal of Turkish money from the stock market could accelerate the country’s trend of local capital outflows.”

The shocking moves come as the Turks are re-evaluating their anti-inflation hedges and are struggling with a currency that has lost almost 40% of its value against the green card in the last month. Although the stock market has risen in main terms in Istanbul, the first time recorded this week, surpassing 2,400 points for the first time this week, it has fallen 37% in US dollars this year and has become the worst performing stock market. world.

The central bank’s easing cycle since September has lowered the key rate by 5 percentage points, and there has been a rush to buy dollars among companies and retail investors.

President Recep Tayyip Erdogan has called for a reduction in borrowing costs, arguing that lower rates will eventually free the Turkish economy from dependence on short-term foreign flows. The pivots of politics and the ensuing market turmoil have caused industry complaints that current volatility is hurting companies.

“The typical reaction to the depreciation of the stock markets of the stock market is a boom, as investors use stocks as hedging and major stocks often have a lot of revenue,” said Richard Segal, a research analyst at Ambrosia Capital in London. . “However, it is currently different because of the volatility of the exchange rate, and the pound is approaching rates, which suggests that the ratios of bank capital are low. In addition, some business groups have begun to speak more publicly. ”

(Updates with the latest developments in the second paragraph)