Turkish Equities: Something Is Brewing — But What, and When?

Turkey’s equity market continues to hover near key technical thresholds, sending mixed signals to investors. While falling interest rates and a declining country risk premium offer support, lingering balance-sheet concerns and weak momentum are preventing a decisive breakout. Market participants increasingly sense that a turning point is approaching — but timing remains uncertain.

Author, Strategist Tuncay Turşucu

Global Markets Provide a Mild Tailwind

Turkey’s main equity index ended last week with a marginal 0.27% gain, reflecting a broadly sideways performance. Global markets, however, were largely positive. Asian equities, along with U.S. and European indices, traded mostly in the green.
The UK’s FTSE 100 rose 2.57% over the week, while South Korea’s KOSPI stood out on the downside, falling 3.52%.

BIST Near Resistance, Banks Supported by Falling CDS

The BIST 100 continues to trade stubbornly close to critical resistance levels. On Tuesday, the index tested the 11,400 level but faced profit-taking, ultimately closing near that threshold.

The banking index (XBANK) rose 1.7%, supported by Turkey’s five-year CDS falling to 208, a positive signal for financial stocks. Despite this improvement, XBANK has yet to break through its key 16,800 resistance level.

Meanwhile, the X10XB index, which tracks ten liquid non-bank stocks and had been the previous week’s standout performer, ended the week slightly lower as profit-taking set in.

A notable development came from the XYUZO index (BIST 30), which broke above its July 2024 all-time high of 20,517, closing at 20,742 — a technical milestone worth noting.

XYUZO Breaks Record Highs

Within the XYUZO index, stock weightings are relatively balanced. Companies such as MLP Sağlık (MPARK), Mavi Giyim (MAVI), Magen Energy (MAGEN), AG Anadolu Grubu Holding (AGHOL), Enerjisa (ENJSA) and Türkiye Sigorta (TURSG) played key roles in driving the index higher.

Coca-Cola İçecek (CCOLA) holds the largest weight at 4.54%, though it saw mild profit-taking following its previous rally. PASEU, with a 3.62% weight, provided support last week, while OYAK Çimento (OYAKC), weighted at 3.01%, experienced a sharp pullback.

Outside the banking sector, the renewed activity in these previously sluggish stocks is viewed as a constructive development.

“Something Will Happen — But What and When?”

If the market could speak, it might say: “Something is about to happen, but I don’t know what or when.”
Charts appear technically strong, yet at the same time fragile — as if a sudden reversal could emerge at any moment. While interest rates and CDS spreads are falling, concerns over corporate earnings persist. After repeated false starts, investor confidence remains cautious.

Still, fundamentals argue for staying rational. The Central Bank of the Republic of Türkiye (TCMB) continues its rate-cut cycle, and expectations around easing remain a key support. The decline in country risk premiums is improving risk appetite, while potential developments related to CAATSA sanctions are being watched as a possible positive catalyst.

The Core Scenario for 2026

According to economist reports, March 2026 stands out as a critical point for inflation dynamics. The effects of interest rate cuts implemented in 2025 are expected to be felt more clearly by May 2026.

If this scenario plays out, inflation could enter a more decisive disinflationary phase. Some analysts even suggest that macroprudential restrictions on banks could be eased. As a result, the second half of 2026 is increasingly seen as the period when risk appetite may rise meaningfully and a stronger, more sustained equity trend could begin.

In contrast, the early months of 2026 may remain sluggish due to high inflation expectations and limited visibility on trend direction.

Ratings Outlook: A Possible Surprise?

A brief side note: two international credit rating agencies are expected to review Türkiye’s outlook in January. No upgrade is currently anticipated, but some observers argue that a positive surprise cannot be ruled out — which would be a significant market catalyst.

Technical Outlook for the BIST

From a technical perspective, the market appears structurally strong but lacks momentum.

• 11,500 remains the key resistance level. Without a decisive break and consolidation above this threshold, a meaningful rally is unlikely.

• On the downside, holding above the 11,000–11,100 zone is critical. As long as this support holds, upside attempts are likely to continue.

That said, the current sideways phase should not drag on for too long if the market is to maintain its underlying strength.

Author: Tuncay Turşucu

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