Foreigners Flee Turkish Stocks at Fastest Pace Since March 2019


Turkish equities experienced the largest outflows by foreign investors for more than 15 months last week as the country’s currency weakened sharply.

Non-residents sold a net $566.5 million of stocks in the week through Aug. 7, according to central bank data published Thursday. The exit was the biggest from the Istanbul market since March 2019, when authorities constricted supplies of dollars. The latest bout of selling by foreigners brings their net disposals of Turkish stocks this year to $5.1 billion.

Foreigners Flee Turkish Stocks at Fastest Pace Since March 2019

The lira depreciated 6.3% against the U.S. dollar in the two weeks through Aug. 7, shattering the narrow trading range it had been confined to in the previous six weeks. Several foreign lenders were unable to meet lira obligations as the cost of borrowing in the currency jumped for offshore investors, likely prompting some to sell stocks to raise funds to cover their commitments. The benchmark Borsa Istanbul 100 Index lost 16% in dollar terms.

“The continued and steep decline in foreigners’ share in Turkey’s equity markets this year signaled that there would be problems with sharp corrections and wild fluctuations on the horizon,” said Ogeday Topcular, a fund manager at RAM Capital.

“Steeper declines, high volatility and corrections are all likely to continue,” Topcular said. “There have been many reasons for foreigners to head for the exits in recent years, and none of these have disappeared. With each lira slump, a new wave of selling among them surfaces again.”

©2020 Bloomberg L.P.

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