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Short selling is not banned when it comes to the BIST-30 index components—the top 30 most traded stocks on the Istanbul exchange—but the uptick rule is in place, meaning you can only send a short-sell order at one level above the last effective price on the trading board.
In general, the Turkish government, the de facto dominant player on all of Turkey’s asset markets, is averse to short sellers. In July, it fined some brokerage houses exempted from the uptick rule. The exemptions enabled them to short shares on the Borsa Istanbul and they did so with gusto. Providing such exemptions to a few players on an organised market appears odd in the first place, however.
The government is also sensitive to the tacit need to keep the benchmark BIST-100 index above the 1,000-threshold. Even though the USD/TRY rate has been destroying all barriers placed in its path, the BIST-100 has stubbornly remained above the ‘glass floor’ since mid-May.
How so? The ‘success’ rides on one simple reason. Dollars are not required to play on the Borsa Istanbul and the Turkish central bank is certainly not shy when it comes to producing lira.
Rumours flare up about the so-called magic of the Turkish-lira denominated benchmark index on a daily basis, but there is a deficit of proof on the identities of the mythical buyers of billions of dollars worth of stocks shed by foreigners since the beginning of this year.
On August 10, the BIST-100 circuit breaker came into effect but there was actually no need for it to be activated.
Local brokerage houses, including government-run Ziraat and Vakif, have been buyers on the Borsa Istanbul since the beginning of this year while Merrill Lynch has led the sellers. (Table by Garanti Invest)
If you’ve not yet heard that foreign stock players have been fleeing Turkey, take heed without further ado: please keep away from the Borsa Istanbul. This market is only for adrenaline-seeking professionals as things stand.
How the once mighty flounder. Turkey is best not considered an EM.
14 TURKEY Country Report October 2020 www.intellinews.com
