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Turkish stocks slumped on Wednesday, with the speed of the declines resulting in two trading halts, as investors worried about the country’s relationship with Israel and the upcoming interest-rate decision by the central bank due Thursday.
The benchmark Borsa Istanbul 100 Index fell 7.1%, the biggest loss since massive earthquakes in February, and was on course for the worst monthly decline in more than three years. Flagship carrier Turkish Airlines contributed most to the decline, with a 6.2% slide, Bloomberg reported.
The Turkish central bank is expected to raise its one-week repurchase rate to 35% at its meeting Thursday, which would be its fifth hike since May, to try to reduce inflation running above 60%.
Wednesday’s stock-market selloff came after President Recep Tayyip Erdoğan said the Palestinian militant group Hamas was not a terrorist organization but a liberation group fighting to protect Palestinian lands and he canceled a planned trip to Israel.
“Hamas is not a terrorist organisation, it is a liberation group, ‘mujahideen’ waging a battle to protect its lands and people,” he told lawmakers from his ruling AK Party, using an Arabic word denoting those who fight for their faith, Reuters reported.
Earlier NATO member Turkey condemned the civilian deaths caused by Hamas’s Oct. 7 attack on southern Israel but also urged Israeli forces to act with restraint in their response. Turkey has backed a two-state solution to the Israel-Palestinian conflict.
Israel rejected Erdoğan’s description of Hamas, with Foreign Ministry spokesperson Lior Haiat calling the group “a despicable terrorist organization.”
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