Turkish Stocks Fall to Six-Week Low as Lira Concerns Build Up

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Turkish stocks declined for a second day as weakness in the lira triggered a selloff after a long rally in the country’s equities.

The Borsa Istanbul 100 Index fell 2.1% as of 4:55 p.m. Wednesday in Istanbul, touching the lowest level since June 18. For the first time since April, the index dropped back to its 50-day moving average, a level that could limit further downside if it holds or accelerate the next leg lower if the benchmark drops below.

Turkish Stocks Fall to Six-Week Low as Lira Concerns Build Up

The lira’s fast depreciation against both the dollar and the euro over the past four days became the first trigger to start the selloff in Turkish equities. The drop was exacerbated Wednesday by the banking regulator’s fine of HSBC Holding Plc’s Turkey unit and Albaraka Turk for breaching a rule introduced to boost credit to businesses suffering from the economic fallout of the coronavirus pandemic.

The BIST 100’s drop the past two days came after a 42% rally through Monday since the index touched its low for the year on March 23. Stocks gained amid a retail frenzy that was driven by diminishing returns from fixed-income investments and bank savings accounts that have left individual investors with few alternatives other than stocks. The appetite of mom and pop investors has more than doubled the value of the nation’s small and medium sized companies this year, making some of industry veterans nervous.

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