After The Turkish Earthquake, The Istanbul Exchange Stopped 5 Days After Its Main Index Drop 16 Percent

Illustration of Borsa Istanbul (Photo: Doc. Antara)

JAKARTA - Istanbul's stock exchange closed trading until February 15. In addition, all trading on Wednesday, February 8 was canceled.

This was after a devastating earthquake that hit Turkey and Suuriah on Monday, February 6. Where hundreds of buildings collapsed and the combined death toll in the two countries rose above 12,000.

Borsa Istanbul Turkey suspended trading on its equity market and derivatives within minutes of opening after circuit breakers across the market halted a 7.0 percent drop in the main index.

The country's benchmark index fell as much as 16 percent from the close of Friday, February 3 before trading Wednesday, February 8 was canceled. For Tuesday, February 7, the loss reached 9.9 percent.

Trading volume was significantly below the regular average of only 2.24 billion on Tuesday, February 7, compared to 4.14 billion on Friday, February 3.

"Due to the tremendous increase in volatility and price movements after the earthquake; to ensure reliable, transparent, efficient, stable, fair and competitive market, the Equity and Derivative Equity & Index market in the Derivative Market has been closed," Borsa Istanbul said in a statement quoting Antara, Thursday, February 9.

"Given the low volume of transactions that do not allow efficient price formation, all trades made in closed markets on February 8, 2023 will be canceled," said the market operator.

Exchange-traded funds that track the performance of Turkey's MSCI index, both priced in dollars, fell nearly 13 percent this week and 20 percent for the year.

MSCI index market capitalization fell from 39.7 billion US dollars at the end of last week to 35.8 billion US dollars at the close of Tuesday, February 7 according to Refinitiv data.

"They have to reopen at some point and allow trade to take place. Waiting for a delay in inevitable price changes," said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

"Reopening and then canceling trade seems unusual, but there are many unusual things that come out of Turkey."

FTSE index provider Russell said his index would reflect the closure of Tuesday, February 7 as trading resumes next week and they monitor the closure further. The guidelines show the FTSE could extend this to 20 trading days.

MSCI did not respond to requests for comment.

Meanwhile, domestic investors started an online petition calling for a reversal of all trades that have occurred since Monday, February 6.

"We call for a reversal of all trades that took place in Borsa Istanbul on February 6, 2023 and the close of the stock exchange during the national mourning period," reads the petition, which received more than 10,000 signatures in a few hours.

Gempa telah memaksa perusahaan besar seperti BP untuk menyatakan force majeure dalam operasi zona bencana mereka di selatan Turki.

Turkey has been hit for years by soaring inflation and the fall of currencies has accumulated into state stocks in recent months, raising the major index by 200 percent last year.

Murat Bakan, a lawmaker from the main opposition, said on Twitter: "Relaying the stock exchange is not enough. Trade on Istanbul's stock exchange after the earthquake should be canceled."

The trade reversal will protect the rights of 500,000 investors, Batan said, adding some may still be waiting for help or not having internet access.

Local investors now control 70 percent of share ownership, up from 35 percent in 2020, while foreign investors holding Turkish shares have fallen to below a third.

Many international investors have stopped in recent years amid repeated market turmoil and the unusual implementation of economic and monetary policy by Ankara, including cutting interest rates in the face of soaring inflation.