The future of the Turkish economy is back on the financial press’ front pages following the political upheaval spurred on by Turkish authorities’ arrest of Istanbul Mayor Ekrem Imamoglu — and Turkish President Recep Tayyip Erdogan’s most prominent rival — early on Wednesday morning. While the Turkish government is scrambling to contain both the economic damage and protests on the streets, the events have brought the question of Turkish economic stability back in the spotlight after a brief period of relative stability.

Turkey’s central bank tore through a record USD 11.5 bn on the day of the arrest to try to stabilize the TRY, the Financial Times reported, citing an informed insider. The unprecedented move — 4x larger than previous pushes to support the TRY — followed the currency falling by double digits against the greenback during trading following the arrest, pushing it to earn the unenviable title of the world’s worst-performing currency for the day.

But after falling up to over 12%, the national currency pared back losses to end the day 4.8% down, which was followed by a continued recovery during the next two days that supported an emergency interest rate increase on Thursday to persuade Turkish savers to not turn their hard-earned earnings into USD. The TRY finished the week 2.6% down.

However, the country’s benchmark Borsa Istanbul 100 is yet to see a recovery, falling 16.3% in the three trading days following Imamoglu’s arrest, which includes a 7.8% drop on the last day the markets were open. The index’s worst week since 2008 led to USD 30 bn in value being wiped from the market. Government debt also felt the squeeze with ten-year bond yields up over 200 basis points.

Foreign investors, who had begun returning to Turkey following recent economic reforms, are rattled. The arrest is a “reminder that President Erdogan intends to tighten his grip on power even more,” In Touch Capital Markers analyst Piotr Matys told Bloomberg. Investors fear growing government intervention and capital flight could derail Finance Minister Mehmet Simsek’s efforts to restore economic stability by unwinding years of unorthodox economic policies — also known as Erdonomics.

TASI

11,760

+0.4% (YTD: -2.3%)

MSCI Tadawul 30

1,490

+0.4% (YTD: -1.3%)

NomuC

30,521

-0.5% (YTD: -3.0%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.0% repo

4.5% reverse repo

EGX30

31,678

+1.1% (YTD: +6.5%)

ADX

9,368

0.0% (YTD: -0.5%)

DFM

5100

-0.6% (YTD: -1.1%)

S&P 500

5,668

+0.1% (YTD: -3.6%)

FTSE 100

8,647

-0.6% (YTD: +5.8%)

Euro Stoxx 50

5,423

-0.5% (YTD: +10.8%)

Brent crude

USD 72.16

+0.2%

Natural gas (Nymex)

USD 3.98

+0.1%

Gold

USD 3,021.40

-0.7%

BTC

USD 83,960

-0.3% (YTD: -10.3%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.4% on Thursday on turnover of SAR 5.9 bn. The index is down 2.3% YTD.

In the green: Petro Rabigh (+9.9%), Retal (+5.0%) and ADES (+4.4%).

In the red: Sinad Holding (-6.9%), Gulf General (-6.2%) and SICO Saudi REIT (-5.2%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.5% on Thursday on turnover of SAR 23.8 mn. The index is down 3.0% YTD.

In the green: MOBI Industry (+9.9%), NGDC (+9.0%) and AlNaqool (+8.2%).

In the red: Naba Alsaha (-16.7%), NBM (-9.2%) and Naas Petrol (-8.8%).

CORPORATE ACTIONS-

Naba Alsaha Medical Services Company’s board approved distributing SAR 3.15 mn in dividends for FY 2024 at SAR 0.30 per share, it said in a disclosure to Tadawul. The distribution is set for 10 April.

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