Atilla Yeşilada Warns of “Perfect Storm” Risks Heading Into 2026

Turkish economist Atilla Yeşilada has warned that 2026 could be a turbulent year for global and domestic markets, citing a combination of an AI-driven asset bubble, tightening dollar liquidity, and rising vulnerabilities in the shadow banking system. Yeşilada said these factors, combined with Turkey-specific financial stresses, point to the possibility of sharp corrections and high volatility in the year ahead.

AI Rally Signals Market Fragility, Yeşilada Says

Yeşilada described the global equity rally following Nvidia’s stronger-than-expected earnings as a sign of market fragility, arguing that investor sentiment has become dangerously concentrated around a handful of AI-related stocks.

“If even non-AI equities move solely based on one company’s earnings, the financial system is signaling distress,” he said.

Despite rapid growth in AI spending, Yeşilada noted that many industries still struggle to integrate the technology productively — a gap that he believes increases the risk of an AI-driven market bubble.

Global Dollar Squeeze Poses Risks for Emerging Markets

Yeşilada warned that tightening U.S. dollar liquidity could accelerate capital outflows from emerging markets.

“This won’t bring down Turkey, but it will make external borrowing more difficult and strain funding channels,” he said.

He also pointed to rising risks in private credit markets and leveraged debt within private equity, noting that shadow banking vulnerabilities could trigger a chain reaction if conditions deteriorate.

Turkey: Rising Signs of Domestic Financial Stress

For Turkey, Yeşilada highlighted three areas of growing systemic risk:

• Expanding chain of concordatos

The rise in court-approved debt restructurings is weakening market confidence, he said.

• Payment delays and pressure in investment funds

Delays in redemptions at certain alternative investment funds could trigger sharp sell-offs on Borsa Istanbul if not contained.

• Regulatory actions unsettling sentiment

He pointed to ongoing investigations into several payment firms and operations targeting large conglomerates, warning that such developments could heighten market uncertainty.

“Small-Cap Risk Is High; Stick to BIST 30 and BIST 100”

Yeşilada advised investors to remain cautious, noting that risk levels in small-cap equities are elevated.

“The safer ground is in BIST 30 and BIST 100,” he said, adding that overall market risk appetite has weakened significantly.

Outlook for 2026: “High Volatility Is Coming”

Yeşilada expects the combined impact of global and domestic risks to produce sharp corrections and high market volatility in 2026.

“I hope we see a major correction before a full bear market develops. Otherwise, the first quarter of 2026 could become extremely chaotic,” he said.

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