ADVERTISEMENT

Turkish Stocks Rise to Record After Leadership Overhaul

Turkish Stocks Advance, Set for Highest Level on Record

Turkey’s benchmark stock gauge surpassed its highest closing level as changes in the country’s economic leadership buoyed optimism for market-friendly steps and a promising coronavirus vaccine study spurred a rally across global assets.

The Borsa Istanbul 100 Index gained 0.9% to 1,243 points on Tuesday. The gauge has benefited from global investors shifting focus toward riskier assets, rising 7.2% last week.

The most recent push comes after the Turkish President Recep Tayyip Erdogan pledged to stay committed to free markets after replacing the country’s central bank governor and Turkey’s Treasury and Finance Minister.

Turkish Stocks Rise to Record After Leadership Overhaul

Turkish stocks almost hit a fresh record in July, before the rally was hampered by the lira’s slump to successive lows. Foreign investors have sold $5.8 billion in Turkish equities this year, the most since at least 2005, according to central bank data. The surprise departures over the weekend fueled speculation of possible interest-rate increases, which sent the lira up more than 5% on Monday.

President Erdogan on Saturday fired Governor Uysal and appointed Naci Agbal, after the central bank’s attempts to increase borrowing costs through rate increases and back-door tightening failed to cap the depreciation in the country’s currency. The lira has lost about 27% against the dollar in 2020, a decline that has accelerated since the central bank held back from raising the cost of borrowing at its October meeting.

On Sunday, Erdogan’s son-in-law Berat Albayrak unexpectedly resigned as the country’s economy czar, citing unspecified health reasons. On early Tuesday, Erdogan appointed Lutfi Elvan as the new finance and treasury minister.

Elvan pledged to prioritize reining in inflation and focusing on a “market friendly” transformation of economy in a written statement shortly after officially taking over the ministry.

Akbank TAS and Turkish Airlines were the biggest contributors to the index’s gains on Tuesday, rising 5.2% and 7.7%, respectively. The lira slipped 1.1% to 8.1562 per U.S. dollar as of 6:19 p.m. in Istanbul.

©2020 Bloomberg L.P.