Turkish Stock Drop Triggers Circuit Breakers as Banks Tumble

Turkey’s stock exchange was forced into back-to-back trading halts as equities fell the most in eight years after President Recep Tayyip Erdogan’s surprise ouster of the country’s central bank chief.

The BIST 100 Index slumped 9.8% to close at 1379.25 in the biggest retreat since June 2013, with all members finishing lower. The drop triggered circuit breakers for the first time since their introduction in August as the benchmark sank 5%, then extended losses to 7%.

Turkish markets are taking a hit in the wake of Erdogan’s weekend firing of Naci Agbal, whose appointment in November had marked a return to more hawkish monetary policy. The lira tumbled as much as 15% against the dollar during early hours of Asia trading.

Turkish Stock Drop Triggers Circuit Breakers as Banks Tumble

“Investors are worried that the replacement of the central bank governor could mark a U-turn in monetary policy setting,” said Mathieu Racheter, an emerging-market strategist at Julius Baer in Zurich, who cut Turkish stocks to underweight.

“While the MSCI Turkey remains the cheapest equity market within our emerging market universe, an increase in inflation will likely lead to a further de-rating going forward,” he said.

Drug distributor Selcuk Ecza Deposu Ticaret ve Sanayi AS and car retailer Dogus Otomotiv were among 18 stocks in the benchmark that lost 10% in Monday’s session. The Borsa Istanbul Banks Index, where foreign investors’ presence is higher, sank 9.9%.

Turkey’s stock exchange said it was monitoring trading activity continuously and called on investors to act in line with regulations.

©2021 Bloomberg L.P.

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