Borsa Istanbul loses 5.5% in global stock market meltdown

The Borsa Istanbul on March 8 joined in the global stock market meltdown, with its BIST-100 main index sinking 5.54% d/d to close at 103,524, the lowest level it has fallen to in three months.

Though the carnage on Wall Street and the London Stock Exchange was markedly worse and Turkey’s equity markets are presently subject to government controls such as bans on short-selling, there were some very big losers. Shares in tourism companies fell 10.4% d/d as market anxieties grew over what impact the coronavirus could have on Turkey’s big tourism industry, despite the country claiming to have no recorded COVID-19 infection cases.

The index for shares in Turkish football clubs nosedived nearly 12% as investors took fright at the prospect of big sports events being cancelled in the battle to contain the coronavirus outbreak.

Largest Turkish oil refiner Turcas was the worst BIST-100 performer. Its shares were down almost 15% amid the oil price crash caused by Saudi Arabia’s decision to raise its production after the OPEC supply curtailment agreement with Russia collapsed.

The Turkish lira, having lately undergone another bout of depreciation—it is weaker by around 3% against the dollar so far this year, having lost 36% over 2018 and 2019—showed little reaction against the carnage, ending March 9 around 0.4% down against the USD at 6.13. State banks have been selling billions of dollars into the market to defend the currency.

Virtually all oil, gas imported

Since Turkey imports virtually all of its oil and natural gas, economists said the oil price collapse could help the country restrain its historically high inflation and big current account deficit.

Sekerbank chief economist Gulay Elif Yildirim said every $10 drop in the price of a barrel of oil trims the deficit by as much as $3.5bn. During March 9, the price of a barrel of oil collapsed by more than 30% at one point, plunging to around $35.

Reuters quoted Yildirim as saying 2020 will be a "lost year" for global growth. Stimulus provided by larger economies "will benefit Turkey in the medium term ... but in the short term there is a market crash everywhere", she added.

In a note to investors, Julian Rimmer of Investec said: “In Turkey, every $10 fall in the oil price has a deflationary impact of 80bp and adds $5bn to GDP. TUPRS [Tupras] will be worst affected by inventory losses and companies like CCOLA AEFES TKFEN [Coca-Cola Icecek, beverage group holding company Anadolu Efes Biracilik ve Malt Sanayi and conglomerate Tekfen Holding] are all dependent on exports to theocratic whackjobs/oil producing countries (delete as you see fit). Safe havens will be BIMAS MGROS SOKM [retail company BIM Birlesik Magazalar, supermarkets and shopping malls operator Migros Ticaret and discount retail chain Sok Marketler]. Falling transport costs will also help them.”

Some analysts noted that should there be a recovery in global markets, the BIST-100 is expected to recover much more strongly supported by the oil price decline.