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Thursday, May 23, 2024

Earthquake in Turkey with impact on the stock market

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Turkey’s Borsa Istanbul 100 index fell 8.62 percent on Tuesday. Since its peak on January 2, its stock has already fallen more than 20 percent. The country is grappling with the aftermath of two earthquakes that claimed thousands of lives and caused enormous damage.

The Borsa Istanbul 100 index fell more than 8.6 percent on Tuesday. due to the sale of shares of Turkish companies. Among the most sold were shares of Turkish Airlines and the refinery Turkiye Petrol Rafinerileri AS.

The massive sell-off is another blow to the Turkish stock exchange, which has recorded one of the worst results this year (20% down from the peak recorded on January 2). Tuesday’s decline was the biggest since March 2021.

Turning on the stock brakes twice

As Bloomberg notes, circuit breakers appeared twice during the day (when the decline exceeded the threshold of 5, then 7 percent). It is a safety mechanism that is triggered when there are sudden changes in the stock market, both positive and negative. Trade is then frozen for a certain period of time – in the case of the Turkish stock exchange, it was 30 minutes.

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On Tuesday, the Turkish Capital Markets Council withdrew some of the precautionary measures that were imposed on Monday to limit the negative impact on the stock market. Temporary margin rule that requires traders to hold stocks in their brokerage account in order to execute trades has been removed. According to Bloomberg, this could have exacerbated today’s move.

The ban on short selling and betting against Turkish stocks is still in effect. Tuna Cetinkaya, deputy general manager at brokerage Info Yatirim, told Bloomberg that “it’s important to keep the exchange operational to respond to the cash needs of investors from earthquake-affected regions.”

Earthquake in Turkey

An earthquake measuring 7.8 on the Richter scale shook the area on the border between Turkey and Syria early Monday morning. Another 7.5 magnitude quake struck the same area again at noon. More than five thousand people died.

Main photo source: Shutterstock

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