How will the stock market open tomorrow? What we remember from the previous election round!..

The second round of the presidential elections is now almost complete. According to provisional data, the current President Recep Tayyip Erdoğan is close to being declared the 16th President with around 52 percent of the vote. His opponent, Kemal Kılıçdaroğlu, seems to have won 48 percent of the vote. If the Supreme Election Board announces the provisional result in this way and the objections to the ballot box results do not change the situation, it seems that a significant uncertainty has been removed from Turkey’s and, of course, the markets. After that, the date on which politics will be discussed again will be the local elections, which will take place on March 31, 2024. However, since this election will not change either the composition of the Assembly or the government, it will not be as effective as the elections we will leave behind. Of course, if a result that will change the provincial majority in the local elections does not occur.

Now, the first question in the minds of stock market investors is, of course, how Borsa Istanbul will open on the morning of May 29, 2023, tomorrow, and how the stocks will react to the election result.

Of course, it is not scientifically possible to give an answer to this. Investor psychology will determine the reaction completely. But it is useful to remember what happened after the first round of the Presidential elections on 14 May.

What happened?

Which stocks rose on May 15?

Although President Erdoğan could not reach more than 50 percent of the votes in the first round, he was the leader with the highest vote rate. After the announcement of the election results, the stocks that rose in the first session on May 15, 2023 were mostly the stocks of the groups described as close to the government. On the other hand, banking and holding stocks were the ones that fell the most while the Bist100 index collapsed.

In the table below, you can see the 40 stocks that have increased the most (based on stocks that gained more than 5 percent) after the May 14 elections. Let’s take a look at them first.

In the last session before the second round of the presidential elections, we saw that some stocks in this list displayed rapid increases again. However, it is curiously expected how other stocks belonging to similar groups will react tomorrow, that is, on the first trading day after the election.

Will what happened on the morning of May 15 happen again?

Another issue that is eagerly awaited is the course of the index in general. As it will be remembered, it lost 6.14 percent in value on May 15 and quickly retreated to its support of 4501 points. But here is something to be aware of, unlike the previous elections. The week just before the previous election round saw the strongest purchases by foreign investors in a long time, and the foreign share, which had been falling for months, showed a sharp rise. In this one, it was the survey predictions that the opposition would win the election and return to orthodox policies. However, after the result was not quite like this, the foreign investor sold faster than he bought it.

The point is different: the alien doesn’t exist anymore!

Before the second round elections, it was seen that foreign investors, let alone buying, continued their sales and believed that there would be no result for a policy change in the second round. Foreign share in the stock market reached a new historical low with 27.85 percent on May 26, 2023. Compared to before May 15, the decrease in the share of foreigners was 2.36 percent.

Will the stock market fall on May 29?

In other words, it is noteworthy that the rise in Borsa Istanbul on Friday was not caused by foreign investors, but entirely by the support of domestic and even domestic individual and institutional investors. It is an indisputable fact that Bist100 is at the cheapest levels in its history in terms of valuations. However, experts advise to be careful about whether there will be a sale in stocks bought strongly on Friday.

The index, on the other hand, draws attention to the possibility of buying the disappearance of uncertainty under the dominance of locals, not foreigners. Because Borsa Istanbul has revealed a serious real loss this year against both inflation, the dollar and alternative investment instruments.