Turkey’s stock market rebounded sharply upon reopening Wednesday, following a week-long closure in the wake of devastating earthquake that shook the region over a week ago.
The BIST 100
jumped 9.6% as investors welcomed news that the government was pressing state institutions and private pension funds to increase their holdings of Turkish stocks.
Those funds have been told they must now allocate 30% of the funds the government contributes to match individual pension contributions to equities, from a previous 10%, according to an announcement in the Official Gazette on Tuesday, the Financial Times reported.
“The measures will likely help at least balance or limit losses in the market. The first few days are likely to be still volatile,” Burak Cetinceker, a money manager at Strateji Portfoy in Istanbul, told Bloomberg.
Trading on the Istanbul bourse was suspended on February 8th — and trades were cancelled — after the earthquake two days earlier killed many thousands of people across south east Turkey and Syria and left the BIST 100 down 10% from when the tremors hit.
Trading in the iShares MSCI Turkey ETF
listed in New York has continued however, and it jumped 8.3% on Tuesday, in anticipation of Wednesday’s bounce in Istanbul.
The BIST 100 was one of 2022’s best performers, gaining about 200% in lira terms as local investors took to betting on stocks as a way to generate returns as high inflation — currently running at nearly 58% — created a severe cost of living crisis.
However, the benchmark had dropped 18% so far this year as investors balked at the extent of recent gains and became more worried about the outcome of elections in May.
Incumbent President Recep Tayip Erdogan is ideologically wedded to lowering interest rates despite surging inflation and his defeat could herald higher borrowing costs, traders fear.
Separately, the Turkish lira
slid to a fresh record low just shy of 19 to the dollar as traders continued to worry about Istanbul’s high level of indebtedness.