BIST 100 fell to 10,800 within days, wiping out all of the year's gains

The BIST 100 index on Borsa Istanbul fell to 10,800 points during the last trading day of the week, erasing all gains achieved so far this year. The triggers for the decline came from three separate fronts.

Fund investigations that began roughly 40 days ago marked the first breaking point. Allegations of market manipulation and irregularities targeting capital markets prompted institutional investors to reduce their positions. In an environment where foreign investors were already keeping their distance, domestic investors also withdrew from risky assets.

The 100 basis point cut in the policy rate implemented by the Central Bank of the Republic of Turkey not only failed to provide the expected recovery but accelerated selling; following the decision, the index lost more than 3 percent in value.

Sectoral losses were steep. The banking index pulled the market down with a decline exceeding 6 percent during the day, while the communications index retreated over 8 percent. The financial and industrial indices approached the 5 percent threshold, while the technology index lost 4 percent and the BIST All Index declined 3.5 percent.

On the external front, the price of Brent crude rising more than 4 percent to above 114 dollars deepened concerns over global inflation and interest rates. Although relief buying that came in after mid-day partially offset sectoral losses, the index closed below the 11,000 psychological level.