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This article was originally written for Türkiye Today’s weekly economy newsletter, Turkish Economy in Brief, in its September 16 issue. Please make sure you are subscribed to the newsletter by clicking here.
The lawsuit demanding the annulment of the main opposition Republican People’s Party (CHP) 38th ordinary congress—a case that has preoccupied not only politics but also markets in Türkiye for weeks—has been postponed to Oct. 24 without precautionary measures. Markets, which had been under heavy stress for some time, breathed a sigh of relief at the decision.
Two weeks ago, after a court ruling annulled CHP’s Istanbul provincial congress held in October 2023, expectations emerged this week that the congress lawsuit could result in a ruling removing chairman Ozgur Ozel and reinstating former leader Kemal Kilicdaroglu.
Markets were also tense during this period. Türkiye’s benchmark stock index, the BIST 100, which had fallen 4.95% the previous week, declined by another 3.3% last week under selling pressure.
The second postponement of the congress case, which became the week’s main agenda item, sparked major enthusiasm in the markets.
The BIST 100, which closed at 10,372 points last week, quickly rebounded after the court ruling. The index ended the first trading day of the week up 6.06%, closing at 11,000 points.
Türkiye’s two-year benchmark bond yield fell by 1.87% to 39.9%. A decline was also observed in credit default swap (CDS) risk premiums, while the USD/TL exchange rate, which reached 41.37 during Monday’s trading, eased to 41.28 by the close.
It should be noted that the case has not yet been concluded, only postponed to a later date. Markets appear to be treating this “temporary relief” period as an opportunity, with buying interest in stocks that have been “oversold” for some time.
In a report published on the matter, local brokerage Trive Investment stated: “Markets remain positive until the next trial, but will move depending on developments as the date approaches. We saw similar pricing patterns after the postponement decision in June.”
Economist Tuncay Tursucu also commented: “Postponement of the case has a positive effect on the markets and causes a sharp rally in the stock exchange. This situation could push the index toward $283. However, since it is only a postponement, uncertainty remains, making further gains difficult.”
A Bloomberg report citing market analysts similarly noted: “This decision, even if temporary, seems to provide a few weeks of relief. Therefore, in the short term, it is positive for market sentiment. But eventually, a final ruling will be made.”
With around five weeks until the next hearing, the Istanbul stock exchange appears set to enter a new “wait-and-see” period.
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