After experiencing significant losses due to forgotten open positions and low trading volume in the stock market, experts believe that some of the damage has been partially remedied through measures taken after the market was temporarily closed. It would be fair to say that the Borsa Istanbul (BIST) has now returned to its normal trading pattern, with logical pricing behavior replacing excessive price reactions. Many experts have noted the need for intervention in a market that is normally expected to operate freely and without interference. Mark Mobius, who has frequently made inaccurate predictions about the Turkish market, has also suggested that such interventions could have negative consequences. However, it is still too early to tell whether such interventions will have a negative impact.
The excessive pricing trend in cement, iron and steel, and construction-related stocks, which were expected to create business volume through the reconstruction of the region with heavy damage after the earthquake, has come to an end. The latest IPOs seem to be among the most profitable. The stock market has already reflected the devastating effects of the earthquake on stocks, as well as the sectoral effects that will be generated by the efforts to recover from it. Thus, it seems that aggressive earthquake pricing in the stock market has come to an end. However, there is a critical timeline ahead, with the release of the 2022 year-end financial statements. The balance sheet disclosures are almost complete, and the valuation of first-quarter financial statements will begin very quickly. This part is critical because there is a possibility of negative changes to the scenario of transitioning from a high inflation period to a less high inflation period, due to the destructive earthquakes and recovery efforts. This could both raise the expected return level for Borsa Istanbul this year and change the balance sheet analysis.
The Potential Impact of Elections on Investors in the Stock Market
The upcoming elections could have a more immediate impact on investors than any of the other factors discussed. As of yet, there has been no indication that the elections will be postponed, and it remains to be seen whether they will be held on their normal schedule in June or moved up to May. Regardless, it is important to note that the stock market may react differently to these elections than in the past, as there has never been such a high level of domestic investor control in the market during an election period. Despite the negative effects of the general economic situation, investing in the stock market could still be a good way to counteract these effects and hedge against inflation, potentially leading to pre-election rallies in the market. However, some analysts caution that there may also be high short-term risks associated with investing in stocks, and that a new downturn could occur in the near future, even if their long-term outlook is positive.
BIST is Currently Stumbling
Last week, the BIST 100 index rose by 0.63% to close at 5,058.75 points in Türkiye, and attention has turned to the GDP data on Tuesday and inflation figures on Friday. Economists participating in the expectations survey predict that GDP increased by 2.8% in the fourth quarter of last year. The Central Bank of the Republic of Türkiye (CBRT) reduced its policy rate by 50 basis points to 8.50% last week and stated that “the Committee believes that the monetary policy stance is sufficient to support the necessary recovery after the earthquake while preserving price stability and financial stability after this moderate cut.” Analysts highlight that the technical support levels for the BIST 100 index are 5,050 and 5,000, while resistance levels are 5,100 and 5,150 points. Additionally, economic confidence index and trade balance will be followed on Monday, manufacturing industry PMI on Wednesday, and CBRT’s summary of the meeting on Thursday in Türkiye.