ISTANBUL: Turkey’s stock market has logged its worst two days since the global financial crisis of 2008 this week, with bank shares plunging and stop-loss halts activated after President Tayyip Erdogan shocked investors by sacking the central bank governor.
The fall in the main BIST-100 index on Monday was the largest since mid-2013, when a “taper tantrum” in response to the US Federal Reserve’s announcement it would ease asset purchases in future rattled emerging markets including Turkey.
In the two sessions after Erdogan’s firing on Saturday of Naci Agbal, a policy hawk, in favour of Sahap Kavcioglu, who like Erdogan is a critic of high rates, three circuit breakers briefly halted all trading on the Istanbul exchange.
Although the index briefly turned positive on Tuesday in high volatility following an initial dive, analysts said foreign investors were abandoning positions.
“Foreigners are vacating their positions at their losses regardless of the price, and the reaction in the market seems difficult until these orders are finished,” said Enver Erkan of Tera Yatirim. Agbal, appointed less than five months ago as the fourth governor in five years, had drawn market plaudits by lifting the policy interest rate by 875 basis points, to 19%, to curb double-digit inflation. The latest hike was on Thursday, two days before he was removed.
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