Turkey’s BIST 100 index fell to around 13,100 in early March from its record high of 14,339 on February 16th, reflecting heavy pressure on Turkish assets as the outbreak of war in the Middle East prompted investors to shift into safe-haven instruments. Iran exchanged strikes with several neighboring US-allied countries following US attacks over the weekend, raising the risk of a protracted regional conflict and potential disruptions to key energy infrastructure, which in turn sent oil and gas prices sharply higher. These developments weighed on emerging market equities worldwide.
Turkish banks were hit particularly hard: shares of Garanti, Koç, and Akbank tumbled between 10% and 18% from their recent record peaks, with the sector’s losses exacerbated by the weakening lira and expectations that the Central Bank of the Republic of Turkey (TCMB) will maintain a tight monetary policy stance in response. In contrast, relative strength in Aselsan helped limit a deeper decline in Turkey’s benchmark index.
