By Tuncay Turşucu: It Is Too Early to Price the Worst-Case Scenario

Originally written on March 1

Summary:
Markets dislike uncertainty, and a negative open in equities would not be surprising amid rising geopolitical tensions. However, according to market analyst Tuncay Turşucu, it is premature to discuss worst-case scenarios. The durability of oil price spikes and the longevity of conflict will determine whether current weakness becomes structural or remains a short-term correction.

Strategist Tuncay Tursucu

Opening Weakness Is Likely — But the Close Matters More

Regional equity markets such as Egypt, Jordan and Saudi Arabia have already declined between 2% and 2.5%. By the time domestic markets open, Asian markets and U.S. futures will have set the tone.

Turşucu argues that there is little to do at the opening bell. Prices will likely gap lower. Some investors may rush to sell into weakness, pushing indices further below the open.

Yet in volatile sessions, the closing level is more important than the opening print.

• If the index closes below the opening level with a strong bearish candle, it signals that selling pressure could continue the next day.

• If the market closes near or above the opening level, it suggests buyers gained control toward the end of the session.

“In days like this, the closing price tells the real story,” Turşucu notes.

Reuters: Turkish Central Bank FX Sales Reach $8 Billion as Markets Reel from Iran War

Margin Calls and Forced Selling

Forced liquidations from leveraged positions may create temporary pressure on the index. Historically, such adjustments tend to last one to two sessions before the market stabilizes.

Turşucu expects:

• Short-term volatility driven by margin adjustments

• Potential stabilization once forced selling subsides

He also highlights the possibility of corporate share buybacks — though not necessarily on the first day. Companies, like investors, typically wait to assess how deep the decline may go. However, sufficiently lower valuations may trigger buyback activity and attract professional investors sitting on cash.

Over time, such flows can help shift sentiment.

Stay Calm, Focus on Fundamentals

Turşucu stresses that investor behavior depends on liquidity needs:

• Investors deploying surplus capital can remain calm.

• Those who invested funds needed in the short term may struggle to withstand volatility.

In the long run, he emphasizes, what matters is not the index trajectory but company fundamentals.

“If your company’s earnings, revenues and equity are growing, there is no reason to panic.”

For quality companies trading at reasonable valuations, medium- to long-term prospects remain intact — provided investors have the patience to wait.

The Real Risks for Markets

Turşucu refrains from geopolitical speculation, arguing that military assessments should be left to specialists. Instead, he focuses on market transmission channels — particularly oil.

Oil Is the Key Variable

Brent crude closed Friday at $72 per barrel, but over-the-counter indications suggest trades near $80. Futures markets will provide clearer signals.

Market expectations currently point toward Brent testing the $80 level.

Iran has announced restrictions in the Strait of Hormuz but stated it does not intend a full closure. This is critical.

• A closure lasting days or even weeks would have limited structural impact.

• A prolonged shutdown could push oil toward $100 or higher.

A sustained oil spike would:

• Raise global production costs

• Complicate the inflation outlook

• Slow global growth

Short-lived spikes, however, are less disruptive.

Implications for Türkiye

Türkiye’s Medium-Term Program (OVP) assumes oil near $60 per barrel.

If oil remains elevated for one to two quarters:

• The current account deficit would widen.

• Inflation could overshoot projections by 2–3 percentage points.

A temporary spike would be manageable. A multi-quarter rally would not.

Central Banks and Capital Flows

A prolonged conflict accompanied by high oil prices would likely:

• Delay global rate cuts

• Impact emerging market capital inflows

• Increase foreign outflows from markets such as Türkiye

However, Turşucu argues that these structural shifts will not be determined within a day or two. Clarity will emerge over several weeks.

For now, statements from Iranian officials suggesting no intention of a full Hormuz closure provide short-term relief.

OPEC+ Production Adjustment

OPEC+ has reportedly increased planned daily production hikes from 137,000 barrels to 206,000 barrels.

Whether this offsets geopolitical risk premiums remains to be seen.

Bottom Line

• Short-term volatility is likely.

• Forced selling may exaggerate initial weakness.

• Oil prices are the primary macro risk.

• Structural damage depends on duration, not headlines.

Turşucu concludes:

“It is too early to talk about the worst-case scenario.”

Markets may stabilize if tensions ease and energy flows normalize. Until then, patience and selectivity remain central to equity strategy.

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