Turkey’s Borsa Istanbul suspends trading after deadly earthquakes

The stock exchange operator of Istanbul suspended trading until February 15 and cancelled all Wednesday's trades after the devastating earthquakes that struck Turkey and Syria on Monday.

The tremors rocked Turkey and Syria in the early hours of Monday, with hundreds of buildings collapsing and the death toll in both countries climbing above 12,000.

Turkey's Borsa Istanbul suspended trading of its equity and derivatives markets within a few minutes of opening after market-wide circuit breakers stopped the slide in the main index at 7%.

The country's benchmark index fell by as much as 16% from Friday's close before Wednesday's trades were cancelled. The loss is 9.9%, as of Tuesday's close.

On Tuesday, trading volumes were slightly below the regular averages at just 2.24 billion trades compared to Friday's 4.14 billion.

Equity Market and Equity Index Derivatives in the Derivatives Market have been closed due to the increase in volatility and extraordinary price movements after the earthquake disaster, and to ensure the reliable, transparent, fair and competitive functioning of the markets, according to Borsa Istanbul's statement on Wednesday.

The market operator said that due to the low transaction volume that does not allow efficient price formation, all trades executed in the closed markets on February 8, 2023 will be cancelled.

A exchange-traded fund that tracks the performance of the Turkey MSCI index, both priced in dollars, is down almost 13% this week and 20% for the year.

The market value of the MSCI index fell from $39.7 billion at the end of last week to $35.8 billion at the close on Tuesday, according to Refinitiv data.

They will have to reopen at some point to allow trades to take place. Brian Jacobsen, Senior Investment strategist at Allspring Global Investments, said that the company didn't wait for the inevitable price changes.

There have been a lot of unorthodox things coming out of Turkey, despite the fact that reopening and cancelling trades seems unorthodox. The indexes will reflect Tuesday's close when trading resumes next week and they are monitoring for further closures, according to the index provider FTSE Russell. Its guidance shows that the FTSE could extend this for up to 20 trading days.

MSCI did not respond to a request for comment.

Domestic investors started a online petition calling for the reversal of all trades that took place since Monday.

The petition received over 10,000 signatures within a few hours of the reversal of all trades that took place on Borsa Istanbul as of February 6, 2023 and the closure of the exchange during the national mourning period.

The quakes have forced major corporations like BP to declare force majeure in their disaster zone operations in southern Turkey.

The main index was lifted by 200% last year after being plagued by soaring inflation and currency crashes for years.

Murat Bakan, a member of the main opposition, said on Twitter: Suspending the exchange is not enough. Trades that took place on the Istanbul stock exchange after the earthquake have to be cancelled. The reversal of trades will protect rights of 500,000 investors, Bakan said, adding that some people might still be awaiting help or not have Internet access.

Local investors now account for 70% of their stock holdings, up from 35% in 2020, while the share of foreign investors holding Turkish stocks has dropped to below a third.

Many international investors have quit in the past due to recurring market turmoil and Ankara's embrace of unorthodox economic and monetary policies, including cutting interest rates in the face of rising inflation.