FX.co ★ Turkish Stocks Decline from Record

In October, the BIST 100 index in Turkey dropped to 10,925, unable to sustain the previous week's peak of 11,600, primarily due to increasing political risks and the prospect of sustained high interest rates which dampened demand for riskier assets. Recent economic data pointed to a domestic inflation rate of 33.3% in September, marking its first rise since May 2024. This challenged the earlier belief that ongoing disinflation would enable Turkey's central bank to prioritize economic growth. Compounding this, looming political uncertainties emerged with the impending court decision related to the leadership of the main opposition party, the Republican People's Party, potentially triggering further capital outflows. Despite these challenges, the BIST 100 has nonetheless increased by 11% since the beginning of the year. The surge in inflation and the weakening of the Turkish lira have led investors to turn increasingly to stocks and bonds as a hedge against declining purchasing power.