Turkey’s Stock Market Slides: What the ~2% Drop in the BIST 100 Really Signals for Foreign Investors

The BIST 100 fell almost 2% in the November 11 session, one that was felt across the market. This wasn’t casual volatility, but it also wasn’t too surprising when considering the recent language of the CBRT.

Türkiye’s equity market has had many ups and downs this year. After the mass outflow following March’s events, foreign investor confidence has been cautiously returning, valuations have normalized, and corporate earnings have remained resilient despite inflation and worsening financing conditions. But this recent drop highlights an important feature of the Turkish market: investors are reassessing risk, and expectations around the CBRT and its economic policy are shifting quickly.

1. The Markets Are Reacting to Uncertainty Around Interest Rates

With headline inflation falling, markets were expecting rapid cuts. That optimism directly supported equities, and especially banks, exporters, and consumer-sensitive sectors.

But as we highlighted in our monetary analysis, the Central Bank of the Republic of Turkey (CBRT) has yet to confirm that it will continue with the policy. Instead, the CBRT has shifted its tone and is more cautious. After all, core inflation remains sticky, pressure on the lira is rising, and global conditions are worsening, all aspects that make fast cuts unlikely.

And the result?

Suddenly, investors are no longer as confident that rate cuts are guaranteed. The ~2% drop is the market calibrating from excessive optimism to more realistic levels.

2. Banks Took a Hit — and That Matters

The banking sector was among the most affected by the decline. Banks generally thrive on two things:

• Predictable monetary policy

• A clear timeline for easing

A delay in rate cuts means:

• Higher funding costs for longer

• Slower loan growth

• Lower credit demand from corporates

• A weaker outlook for retail borrowing

Foreign investors pay close attention to bank performance because it often reflects the broader economic cycle in Türkiye. Foreign investor holdings have a statistically significant effect on the BIST 100 index and banking equities, and so a sudden pullback in banking stocks, therefore, signals a deeper shift.

3. FX Concerns Are Back in Question

Whenever the BIST falls sharply while the lira shows signs of weakness, investors begin reassessing risk. The CBRT’s hesitation to cut rates suggests they see credible dangers to the lira behind the scenes.

Foreign investors know that if the lira is unstable, the equity gains can be evaporated instantly.

A ~2% drop does not indicate panic, but it does show some heightened sensitivity to currency risk.

4. Short-Term Profit Taking Also Played a Role

After several strong weeks in equities, some degree of profit-taking is inevitable. A ~2% decline is not unusual on its own. But its timing matters. This drop came exactly as policy expectations changed. In other words, this wasn’t normal profit-taking; it was one triggered by changing CBRT signals.

5. What This Indicates for Foreign Investors

A reminder to be careful

Foreign investors should consider the decline as an adjustment in expectations, not a sign of collapse. And the framework is clear:

• Markets were waiting for rate cuts.

• The CBRT may delay those cuts.

• Risk premiums are adjusting to the new landscape.

Near-Term Outlook: Volatile, depending largely on CBRT signals
Medium-Term Outlook: Driven by FX stability and the global environment
Long-Term Outlook: Still attractive, potentially supported by a more credible CBRT

The BIST remains relatively cheap compared to other emerging markets, and Turkish corporates still demonstrate resilience. But investors must pay attention to FX pressures and central-bank credibility before acting.

Bottom Line

The ~2% fall is not random movement or simple profit-taking. It’s the market reacting to the changing language and expectations of the CBRT.

Türkiye’s market remains promising, but gains once seen as inevitable may now require more caution. Going forward, investors will need to pay close attention to CBRT signs, FX trends, and sector-specific data.

Right now, the BIST is not free-falling; it’s repricing.
And that repricing is why this matters to investors.