Borsa Istanbul Extends Rally as Rate Cuts and Foreign Inflows Boost Outlook

Borsa Istanbul has maintained a strong recovery since June, driven by the Central Bank of Türkiye’s (TCMB) return to a rate-cut cycle and sustained foreign investor interest, lifting both financial and non-financial sectors.

Market Recovery Momentum
After volatility in March shook currency and bond markets, the TCMB moved decisively to stabilize reserves. An April policy rate hike curbed FX demand and helped keep Türkiye’s credit risk premium in check. This policy stance contributed to Moody’s upgrading Türkiye’s credit rating to Ba3 in July.

With rate cuts starting amid already tight financial conditions, the MSCI Turkey Index rose 14% in USD terms in June–July. The rebound was led by financial stocks, but analysts expect non-financial sectors to benefit more in the coming months.

Gradual Earnings Recovery Outside Finance
Tera Yatırım expects the TCMB to continue easing while keeping monetary policy disciplined, with a stronger real exchange rate lowering country risk and supporting banks. Lower borrowing costs are projected to filter into non-financial sectors with a delay, leading to an inflation-adjusted net profit growth of around 7% in 2025 for companies under coverage.

Sector Highlights and Rating Changes

• Tofaş: Upgraded from Market Perform to Outperform after Stellantis merger.

• Türk Traktör, Kardemir (D): Raised from Underperform to Market Perform due to earlier weak performance.

• BİM: Downgraded from Outperform to Market Perform on weak consumer demand.

• Pegasus: Cut from Market Perform to Underperform on falling per-passenger revenue and slowing profitability.

Outperform Ratings Maintained
Telecom giants Türk Telekom and Turkcell, plus automakers Ford Otosan and Tofaş, remain top picks. Positive expectations also persist for industrial and retail leaders Tüpraş, Erdemir, and Migros.