Turkish authorities have issued a series of regulations to support equities markets ahead of Wednesday’s reopening looking to encourage a cash injection.
Türkiye’s stock index soared almost 10 percent on Wednesday after five days of earthquake-related closure and last week’s steep losses, as government measures to prop equities looked to be working.
Borsa Istanbul halted trading on its equity and derivatives markets two days after the earthquakes that claimed more than 41,000 lives in Türkiye and neighbouring Syria.
Turkish authorities issued a series of regulations on Tuesday to support equities markets ahead of Wednesday’s reopening, looking to encourage a cash injection.
“Turkish stocks have benefitted from the intervention in the market we have seen from the government there, all designed to prevent a crash following the closure of the exchange a week ago,” said analyst Stuart Cole, chief macroeconomist at Equiti Capital.
“So far the policy appears to have worked, judging by the performance at the open… however, you do have to question how strong underlying sentiment is and what investors would be doing if this official support were not there…” he added.
Turkish authorities pushed through new regulations including measures incentivizing company share buyback programs, and increasing obligatory pension fund allocation for stocks.
On Tuesday, the withholding tax on share buyback programmes was cut to zero from an earlier 15% to encourage companies to buy back shares and in turn stabilize their market value in the stock exchange.
The general assembly decision mandate for share buybacks was also waived, allowing listed companies to start share buyback programmes with just a management board decision.
Several listed companies, including the flag carrier Turkish Airlines, and lenders Isbank, Halkbank and Vakifbank have announced some 16 billion lira worth of share buyback programmes since Tuesday, according to a Reuters tally.
Under another new rule, authorities increased the mandatory allocation of shares in the government-sponsored part of the pension scheme to 30 percent from an earlier 10 percent allowing some 8-9 billion lira to flow to the stock exchange, according to analysts.
Borsa Istanbul said on Tuesday that order cancellation, price worsening and quantity reduction will not be allowed during opening.
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