Turkish Military Campaign Against Islamic State Pressures Stocks
EghtesadOnline: Turkish stocks slumped the most among global equity markets as the country’s armed forces began bombing Islamic State positions in Syria, stoking concerns among investors about a worsening security situation.
The Borsa Istanbul 100 Index fell 2.4 percent to 75,460.77 as of 9:43 a.m. in Istanbul, the biggest decline since July 21, making it the worst performer among 94 equity indexes tracked by Bloomberg. The lira declined 0.1 percent against the dollar while bonds also fell, with yields on 10-year debt rising 8 basis points to 9.87 percent.
The start of Turkish military operations in Syria’s Aleppo province, announced Wednesday morning by the prime minister’s office, add geopolitical risk to a lengthening list of concerns testing the resilience of investors. The country’s assets have been volatile since an attempted coup last month and amid a subsequent political crackdown, and as Moody’s Investors Serviceconsiders downgrading its debt to junk, reports Bloomberg.
“Headlines this morning referring to the operation to ISIS-controlled Jerablus in Syria seem to be taking a toll on already hurt sentiment toward Turkish assets,” Gulsen Ayaz, director of Institutional Sales at Istanbul-based Deniz Yatirim Menkul Degerler, said by e-mail, using an abbreviated name for Islamic State, which is a Sunni Muslim insurgent group that declared a caliphate for territory it controls in Iraq and Syria.