The signs of change in the Turkish economy have also become visible in stock markets. The decline in Turkey’s 5-year bankruptcy risk premium and the re-entry of foreign investors into TRY assets led to a divergence in Borsa Istanbul indices. The strongest increase was in the banking index. The banking index rose by 19.1 percent between October 30 and December 15.
The IPO index, a favorite of recent years, lost 11.7 percent in the same period, while the BISTUMY index, which consists of non-BIST100 stocks, lost 3.35 percent. In fact, 12 new IPO companies started trading on the stock exchange between October 30 and December 15.
Foreign investors inflowed approximately USD 1.4 billion from the week starting from October 30 to the end of December 8.
Foreign investors share at 34.67 percent
Foreign investors, who have been in an uninterrupted outflow position from TRY assets for the last 4 years, sold a total of nearly USD 70 billion in this period. The share of foreign investors, which was over 65 percent for a period, decreased to 27.5 percent. As of December 15, the share of foreign investors in the stock market is 34.67 percent. Experts point out that the foreign share in the stock market has increased in recent weeks
USD 562 million inflow to the stock market in one week
The monetary policy returning to the traditional policies, the determined fight against inflation, the increase in the Central Bank reserves, and the investment tours of the Minister of Treasury and Finance Mehmet Simsek turned foreigners’ attention back to TRY assets. This was accompanied by changes in outlook by international credit rating agencies. As a result, foreign investors made net purchases of USD 1 billion 365 million in the stock market for the last 6 weeks and USD 562.4 million in the week of December 8.
Turkey’s 5-year bankruptcy risk premium CDS also fell below 300 basis points. Although it was a disappointment that the credit rating agency Moody’s skipped its assessment of Turkey last Friday, the credit rating, which is already six notches below investment grade, is not expected to have much impact on foreign investors’ interest in TRY assets at the moment. The banking index, which lagged behind in the period of unconventional monetary policy, took the lead in the new period.
Eyes on CBRT decision
The most important agenda of this week in domestic markets will be the Monetary Policy Committee meeting of the Central Bank of Turkey (CBRT). CBRT is expected to take the last steps of the tightening process by raising the policy rate by 250 points to 42.5 percent at the Monetary Policy Committee meeting on December 21.
