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Turkish Banks Climb as Short-Sale Ban, Inflation Accounting End - BLOOMBERG
(Bloomberg) -- The Turkish banking index rose after a regulatory boost that removed the short-selling ban on biggest stocks and skipped inflation accounting for financial firms.
The ban on short-selling stocks included in the BIST-50, an index of the biggest 50 companies, will be lifted as of Jan. 2, according to a decision published by Capital Markets Board late Thursday. Restrictions remain in place on short-selling shares outside that index.
Banks gained in early trading on Friday, led by Akbank, Yapi Kredi Bankasi and Garanti BBVA. The banking index advanced as much as 3.7%, extending this year’s gain to 72%.
The removal was among investors’ wishes as it would give them an option to bet either way in the Turkish equities market. Lifting the ban was among options that Turkish officials considered to unwind so-called macroprudential measures, Bloomberg reported in October.
“This is long-awaited good news that will help the market work more effectively,” said Can Oksun, a senior trader at Global Securities in Istanbul.
Turkey first banned short-selling of some shares in 2020. Restrictions were later eased but following deadly earthquakes in 2023, they were expanded to cover the entire market.
Turkish Regulator Lifts Short-Selling Ban for Top 50 Stocks
“This move would help instill confidence in investors, as it’s important to be able to bet either way,” said Seda Yalcinkaya Ozer, head of research at Istanbul-based brokerage Integral Yatirim. “It’s positive in the sense of moving toward normalization and improving perceptions.”
Short-selling is essentially a bet that shares will fall. Short-sellers borrow stocks and sell them, expecting their price to decline. If it does, the short-seller buys them back at the lower price and pockets the difference.
In a separate move supporting market, the banking regulator said lenders and financial companies won’t have to implement inflation accounting in 2025, removing an uncertainty before full-year results are announced.
Turkey Spares Banks From Inflation Accounting in Earnings Boost
Turkey switched to inflation accounting this year for non-financial companies after three-year cumulative domestic producer price growth exceeded 100%. Banks were exempted for 2024 but were previously told they too would shift next year.
--With assistance from Tugce Ozsoy.
