Borsa Istanbul Resumes Trading, Plunge Protection Team Established
Borsa Istanbul is set to resume trading Wednesday amidst measures to avoid a steep decline in stock prices after the earthquakes in Kahramanmaras that shook the country. According to an official with direct knowledge of the matter, the index opened at 4769.15 points with an increase of 263.81 points.
In a bid to support the stock market, Turkey has established a “plunge protection team” and has waived the 15% profit share withholding tax on buybacks. Meanwhile, Finance Minister Nureddin Nebati held a meeting late last week with the officials of the Central Bank, the Capital Markets Board (SPK) and Borsa Istanbul to discuss how to mitigate the economic and market fallout from the temblors.
Veteran emerging-markets investor Mark Mobius, however, sounded a note of caution, saying the government’s efforts to prop up stocks could have the “opposite” impact. The Turkish lira plummeted to a new all-time low of 18.9 against the U.S. dollar before recovering marginally, dropping by just 0.2%.
Turkish companies have started a buyback program, and are rushing to repurchase their own shares without paying the withholding tax.
Overall, the scope of measures shows authorities are determined to reverse the rout that erased tens of billions of dollars from Turkish companies’ market value in the two days following the earthquakes. Despite Mobius' warnings, he still has a longterm positive outlook on the country’s stocks.
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