Turkey’s Stock Exchange Suspended After Earthquakes Wreak Havoc, Wipes $35 Billion in Value
On Wednesday, Turkey’s stock exchange suspended trading for five days, until the evening of Feb. 14, after two devastating earthquakes wreaked havoc throughout the country earlier this week. The benchmark Borsa Istanbul 100 Index, which had already been the worst-performing equity market in the world this year, tumbled almost 10% in the two days it remained open after the disaster. This triggered circuit breakers that forced trading to halt twice and wiped $35 billion in value off its flagship exchange.
The Turkish lira also experienced a record low against the dollar as traders continued to be worried about Istanbul’s high level of indebtedness. On Wednesday, the iShares MSCI Turkey ETF (TUR), which follows the performance of multiple Turkish stocks, experienced a further decrease of 6%, similar to the 6% decrease it experienced on Tuesday. On Monday, the ETF had declined by 2.4%.
In addition to the financial losses, the earthquakes have caused over 35,000 casualties in Turkey and northern Syria. The government is working to channel billions of liras from state institutions and steps by the stock exchange to contain volatility.
The disaster arrived at a time when Turkey is already battling economic crises on several fronts. Annual consumer price inflation peaked at 85.5% in October, before decreasing, but in January prices were still 57.7% higher than in the same month a year before, according to the Turkish Statistical Institute.
The suspension of trading is expected to help contain volatility and restore confidence to the market. Opposition lawmaker Murat Bakin said in his reaction to the announcement of the Istanbul Stock Exchange that the announcement of business closure alone is not enough; the stock exchange should cancel all trade deals made since the day of the earthquake.
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