Earthquakes Destroyed the Turkish Stock Exchange! What Investors Need to Know?

The earthquake that occurred on the morning of 6th February Monday in Pazarcik, Kahramanmaraş, with a magnitude of 7.7, caused serious damage to many cities in Turkey, including Kahramanmaraş, Diyarbakır, Adana, Hatay, Urfa, Adıyaman and Malatya. While many rescue and search teams and volunteer civilians were working to rescue citizens trapped in the rubble, another earthquake occurred in Elbistan, Kahramanmaraş, in the afternoon. Following the earthquakes on 6th February Monday, significant damage was caused in these cities due to aftershocks. Institutions and citizens in Turkey are continuing to work together to help the earthquake victims. The earthquake not only caused many losses of life and property, but also affected the Turkish stock exchange!

The BIST 100 index, which displayed an unprecedented performance in the second half of 2022, began a sharp drop on 3rd January 2023. Meanwhile, experts warned that there may be fluctuations on the Borsa Istanbul until the election to be held in May. As expected, the BIST 100 index, which was volatile during the balance sheet period, declined again due to the earthquake.

After the earthquake that took place on 6th February Monday, the SPK decided to stop the trading of companies located in and affected by the earthquake regions, in order to prevent losses. Following the occurrence and announcement of the earthquake centered in Kahramanmaraş, the shares of cement companies rose while the shares of other companies listed on Borsa Istanbul declined in value.

Following the announcement by Turkish President Recep Tayyip Erdogan on Tuesday, February 7th, that a state of emergency has been declared in the earthquake-affected regions and a national mourning has been declared throughout the country, the Borsa Istanbul started to decline rapidly. On Tuesday, the BIST 100 index lost 8.62% of its value, declining from 4900 TL to 4500 TL. At the same time, the breaker system linked to the index worked and temporarily stopped all pending transactions in the equity markets twice on the same day.

The BIST 100 index started Wednesday with a drop, after declining by a total of 9.8% in the first two days of the week. With the depreciation reaching 5%, at 10:12, the index based breaker worked and temporarily suspended trading on the Borsa Istanbul. After the losses in the BIST 100 index exceeded 7%, the circuit breaker was activated and stopped the transactions at 4186 TL while the operations resumed again. The statement by the SPK (Capital Markets Board of Turkey) stated that "Our stock exchange has decided to stop transactions in the Pay Market and the Futures and Options Market derivative markets."

The SPK's decision to stop the transactions at Borsa Istanbul on the third day of the earthquake caused a reaction. As a result of two earthquakes affecting ten cities in Turkey, thousands of people lost their lives and tens of thousands became homeless. Despite this, the operations at Borsa Istanbul were stopped by the SPK three days after the earthquake.

CHP President Kemal Kılıçdaroğlu, who shared a tweet last week warning SPK about the volatile structure of Borsa Istanbul, made a statement about the sharp drop in the stock market due to the earthquake. Kemal Kılıçdaroğlu, who said he was in the earthquake region, said "Even in our most painful days, they couldn't get enough of robbing the small investor. Scoundrels!"

Borsa Istanbul, which started to trend downwards since the beginning of 2023 and was volatile, entered the balance period in a more fluctuating manner than expected, while the earthquake in Turkey and the lack of closure of Borsa Istanbul in time resulted in a 16.3% loss in the BIST 100 index in three days. Currently, the lack of quick and effective decision-making during this natural disaster process in a high volatility period at Borsa Istanbul caused the loss to multiply. While things are confusing at Borsa Istanbul, experts warned small investors not to panic and stated that the operations would return to normal after the foggy weather in Borsa Istanbul cleared up.

We express our condolences to all citizens affected by the earthquake. We hope that the people trapped under the rubble will be rescued and treated as soon as possible. You can make donations to organizations such as AFAD and Kızılay to help people affected by the disaster.