Rate decision, political developments to set course for stock market
ISTANBUL
Lower-than-expected inflation in July, coupled with heightened confidence that the Central Bank will sustain interest rate cuts, has ignited optimism among stock market investors.
Coupled with second-quarter earnings that surpassed forecasts, the BIST-100 index extended its rally this week.
Having last set a record in July of last year, the index hit a fresh all-time high on August 21, closing at 11,313.9 points.
While experts expect the positive trend in the market to continue, they also urge caution for September and October.
The record-breaking performance was driven by July inflation coming in below expectations and the belief that the central bank will maintain its rate-cutting policy at its September Monetary Policy Committee meeting.
Meanwhile, the trajectory of inflation and the rate-cut outlook have sustained foreign investors’ interest in Turkish equities, an interest that has persisted for two months and contributed to this week’s record high.
According to central bank data, non-residents made a net purchase of $125 million in stocks in the week ending Aug. 15.
Over the past eight weeks, foreign investors’ net stock purchases have exceeded $1.4 billion.
However, analysts stress that while the upward momentum is likely to continue, domestic political developments in September and October will be key.
Üzeyir Doğan, Deputy General Manager at A1 Capital, said the signals as to whether the stock market’s course will turn into a lasting trend should be sought in the progress of the court case related to the CHP congress, postponed to September.
“There are developments we need to follow. In this respect, September is important: The congress case, the interest rate decision. In October, parliament will also reconvene, where we will be watching developments on potential constitutional amendments,” he said.
