The Turkish lira has fallen hard, and a large scale sale in the stock market has led to the termination of trading, and government bonds jumped to their highest levels this year after investors sold Turkish assets following the arrest of a prominent participant in President Recep Tayyip Erdogan, who increased the political risks. The Istanbul Stock Exchange Index fell by 6.9% at the beginning of the trade, which led to the suspension of transactions under the rules of ‘automated trading’ on the stock exchange, before the activity returned to a 4.6% decline. Turkish sovereign effects have also dropped ten years, bringing their returns by 175 basis points to 29.94%, while the lira dropped by more than 5% against the US dollar, in the worst global performance among different asset categories. Why did the Turkish market withdraw? These losses came after the detention of Istanbul, Akram Imamoglu, Wednesday morning, a day after the Turkish authorities canceled his university degree, in a move that could prevent him from working against Erdogan in the upcoming presidential election. Imamoglu, 54, is one of the most popular politicians in Türkiye, and is seen by the most prominent candidates for the presidency. The candidate selected by Erdogan defeated the municipal election of Istanbul last year, and he was scheduled to announce his candidacy for the presidency of the Republican People’s Party, the most important opposition party, on Sunday. “The Turkish assets are strongly sold.” Bioster Matisse’s head of foreign currencies in the touch capital markets said: “Turkish assets have been sold under strong.” “For some investors, it also reminds them that President Erdogan intends to tighten his grip more power by trying to prevent his most prominent political opponents from being scheduled in the presidential election for 2028, although it is not possible to exclude early elections.” Political tents about the Turkish economy usually affect political developments negatively Turkish stocks, as local investors dominate the stock market in the country, and they are more interactive during periods of fluctuations. Local investors have about 62.5% of Turkish stocks, according to data on the Turkish Securities Deposit Authority website. Political developments destabilize the state of optimism between world investors over Turkish assets, amid the expectation that türkiye will be less influenced by the fluctuations caused by commercial wars. Factors that include reading the best inflation as expected in February, reducing the interest rate, and the hope of strengthening the relationship with the European Union has contributed to pushing Turkish shares to a emerging market earlier this month, while trading the lira with the difference in the return. The wave of sale was also reflected on futures markets on Wednesday morning. The cost of borrowing the Turkish lira outside Türkiye rose one night by more than 10 percentage points to 48%, which forced investors to abandon their positions. 5 points on the sidelines of the collapse of the Turkish lira and shares: the collapse of the Turkish Lira and the shares due to serious political turmoil. The Istanbul Stock Exchange fell 6.9% and the yields of the mortgage increases to 29.94%. The arrest of Imamoglu (Erdogan’s rival) ignites market fear. Expectations to tighten Erdogan’s grip and the possibility of early elections. World investors lose confidence in türkiye amid political risks.
Turkish markets have produced the largest losses worldwide after the arrest of Erdogan’s rival
