Turkiye’s stock market has soared to a record high in 2022 as domestic retail investors seek a refuge from runaway inflation,Bloomberg reports.
The benchmark Borsa Istanbul 100 Index is up 80% in dollar terms this year. In lira terms, the index is up more than 150%, its best performance since 1999.
“Stocks will most probably continue to be favored for at least the first half of next year, even as inflation starts easing,” said Evren Kirikoglu, founder of Istanbul-based Sardis Research Consultancy. “The government is likely to maintain low interest rates and keep the currency under control until the elections around June.”
Domestic investors are piling into stocks as Turkiye’s central bank pursues unconventional policies of cutting interest rates to boost growth even as inflation rates were more than 80%. Monetary easing cycles that took place in 2021, which runs counter to most global central banks’ stance, have led the lira to plunge and turned stocks into one of few havens that yield returns. The currency’s recent narrow trading range has also led to diminished interest in the government’s FX-indexed lira deposit accounts, sending domestic investors to look for alternative assets.