Upside potential in the stock market is strengthening

While US President Donald Trump’s steps towards additional customs duties and protectionist trade policies continue to have an impact on the direction of global markets, the repercussions of this situation on Turkey are being closely monitored. Trump, who is sitting in the presidency for the second time, has made pricing in global markets difficult with his statements on tariffs, Canada and Greenland, and his protectionist policies.

While the news flow regarding the Trump administration's foreign policy and tariffs continues to be the focus of investors, demand for assets considered "safe havens" has continued to increase. During this period, the price of an ounce of gold broke a record by reaching $2,954. The US 10-year bond yield also fell to 4.42 percent.

While Trump's approach to Turkey increased optimism in domestic markets that relations between the two countries could improve, the positive reflections of the policies implemented by his economic management were among the factors that brought Turkey to the forefront in the global environment.

While important developments were observed domestically during this period, the Central Bank of the Republic of Turkey (CBRT) broke a record by increasing its total reserves to 173.2 billion dollars in the week of February 14, and its net reserves excluding swaps to 71.5 billion dollars.

While experts evaluated the impact of developments in global markets on the country, they shared their predictions for the future.

It is estimated that Borsa Istanbul may trend upward again as the Central Bank starts to cut interest rates and the predictions that these cuts will continue remain strong.

"We gained significant maneuverability with the Central Bank's policies"

Speaking to AA correspondent, Strategist Cüneyt Paksoy said that after Trump came to power, his tariffs, rhetoric regarding Canada and Greenland, and protectionist policies significantly affected global markets.

Paksoy, who drew attention to the fact that the stability experienced in the Turkish economy in the recent period is very important, said, "We see this clearly when we look at our reserves, country risk premium, borrowing costs and incoming reports. It will be important for all these gains to pay off in terms of inflation."

Paksoy, stating that foreign inflow is expected to support the stock market in the medium and long term, said, "On the one hand, geopolitical and political developments, on the other hand, the discount cycle of the Central Bank are being closely monitored. While the reserve power of the Central Bank gives it a free hand, the fact that we will not have any problems in the balance of payments strengthens the view of Turkey."

Paksoy stated that there is a technical squeeze in the stock market and that the upward potential is still strong, and that a breakout in the index is expected and that it would be beneficial to be "cautious" until this happens.

Paksoy continued by explaining that they witnessed better performance in some sectors that could benefit from the Central Bank's interest rate reduction cycle and that had their own story:

"Those who choose the right sectors will stand out positively in the upcoming period. At this point, it will be important to get professional support. We have gained significant maneuverability with the Central Bank policies. Now, strengthening this process with structural reforms will both give us strength in the fight against inflation and will be very important for Turkey's vision. With structural reforms, it will be possible to take the Turkish economy to a more durable and strategic period. I think these are important concepts to follow for stock market investors."

"Headline inflation declines, pricing behavior improves"

Colendi Securities Analyst Sadullah Çalışır also said, "While 20 months have passed since the change of economic management in Turkey, we are now in a process where the steps taken are being rewarded. While headline inflation is declining, pricing behavior is improving."

Çalışır, who drew attention to the fact that the country's risk premium has decreased in this process, stated that borrowing costs have improved, while CBRT reserves have increased, domestic investors' interest in Turkish lira assets has increased and foreign exchange demand has decreased.

Çalışır stated that risk appetite has increased in light of developments in global markets and said, "There has been no correlation between Turkish lira assets and abroad for a long time. We are mostly experiencing pricing with our internal dynamics."

Noting that the inflation data to be announced domestically and the pace of the CBRT's interest rate reduction cycle are the most important headlines for increasing domestic and foreign investor interest in the Turkish lira bond and stock markets, Çalışır continued as follows:

"Even if the short-term picture seems to be an unclear environment for investing in risky assets, interest rate cuts that will continue throughout the year and a headline inflation rate below 30% at the end of the year show that Turkish lira bonds and stock markets offer serious opportunities."

Çalışır emphasized that Trump's priorities are to end tariffs and ongoing wars in the world, and drew attention to the fact that the tariffs target countries with which the US has a foreign trade deficit, and that imports and exports between Türkiye and the US are balanced.

Emphasizing that Trump's tariffs have reduced the appetite for investment in developing countries, Çalışır said, "While Turkish lira assets were attractive to foreigners at the very beginning of the interest rate reduction cycle, if a more predictable investment climate emerges after Trump's first 100 days, we may see an increase in foreign investors' interest in Turkey."

Çalışır noted that they accepted 14,500 points as the target level in the BIST 100 index for 2025, and said, "We think that Borsa Istanbul, which has performed well below inflation in the last two years with profit realizations in these periods, offers an opportunity for investors who have achieved real returns in gram gold and interest-bearing instruments."

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