How Did the CBRT’s Hard Rate Increase Affect BIST and Banking Stocks Before?

The appointment of Mehmet Şimşek to the Ministry of Treasury and Finance and the subsequent changes in the Central Bank strengthened the expectation that “Turkey is returning to orthodox policies again”.

Today, President Recep Tayyip Erdoğan’s statement that we accept the steps that Mehmet Şimşek will take with the Central Bank showed that this expectation is not empty.

While foreign investment companies and some banks announced their expectations that the CBRT will raise interest rates between 1000 basis points and 1600 basis points in a single meeting on June 22, Borsa Istanbul investors began to wonder about the fate of the BIST.

How did the sharp changes in the interest rates in the past affect the BIST?

We don’t have much data on this subject. We will examine the BIST movements on two dates when the CBRT made an aggressive rate hike.

28.01.2014 interest rates were increased from 4.5% to 10% in a single meeting. Here is BIST’s reaction to this:

Status of banking shares on the same date:

On 07.06.2018, interest rates were increased from 8% to 17.75% in a single meeting. Here is BIST’s reaction to this:

Status of banking shares on the same date:

* Just because it was like this in the past doesn’t mean it will happen again. This content is not prepared as an investment advice. It is a content showing how BIST has reacted to hard interest rate hikes in the past.

*The investment information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy service is provided within the framework of investment consultancy agreement to be signed between brokerage houses, portfolio management companies, non-deposit banks and the customer. The comments and recommendations contained herein are based on the personal opinions of those commenting and recommending. These views may not be suitable for your financial situation and risk and return preferences. Therefore, making an investment decision based solely on the information contained herein may not yield results that meet your expectations.