Turkey markets slide after court ousts CHP leadership

Turkish officials sought to calm markets on Friday after a court ruling against the main opposition CHP set off a rush out of local assets, knocking the Borsa Istanbul’s BIST 100 down 6 per cent and triggering a market-wide circuit breaker, according to Reuters’ market account. The selling spread into sovereign debt as investors tested whether Ankara could keep a domestic political shock from turning into a broader repricing of Turkish risk.

Officials tried to get ahead of the move. Bloomberg reported that Turkey’s Financial Stability Committee was due to meet at 8:30 a.m. in Istanbul after the ruling, while the Finance Ministry said it was ready to take steps to keep markets functioning efficiently and without disruption. For investors, that turned a party dispute into a test of how fast policymakers could contain volatility once confidence broke.

Reuters said the court annulled the CHP’s 2023 congress, dealing a blow to party leader Ozgur Ozel and adding another pressure point for President Recep Tayyip Erdogan’s main opposition bloc. The U.S.-traded iShares MSCI Turkey ETF fell almost 10 per cent, extending the damage beyond the local session and into overseas trading.

In dollar debt, Turkish sovereign bonds dropped as much as 1.4 cents, among the sharpest one-day falls for many issues since late March, Reuters reported. At home, the domestic 10-year yield climbed to a record 33 per cent, a sign investors were demanding a far wider premium to hold Turkish assets. The move also points to higher funding costs for the state, banks and companies that borrow in the local market.

No analyst cast Friday’s slide as a wholesale break in Turkey’s market framework. The more immediate point was that domestic politics can still overwhelm day-to-day macro trading when the shock is large enough.

Thomas Christiansen of UBP told Reuters that officials may still keep the damage from spreading more widely, though he warned the early read remained provisional. “But it’s too soon to tell,” Christiansen said.

What investors are watching

One test now is whether Finance Minister Mehmet Simsek and other officials back the ministry’s statement with measures that improve liquidity and support price discovery, rather than merely slowing the selling. Bloomberg said the committee meeting brought together the agencies responsible for financial stability, suggesting Ankara wanted to present a coordinated response before overseas investors reassessed Turkish political risk later in the day.

There is also a political reading traders cannot ignore. Kieran Curtis of Aberdeen told Reuters said Erdogan would “much rather run against Kilicdaroglu than anyone else in the CHP,” framing the ruling as more than an internal party dispute. If investors adopt that view, the selloff may look less like a one-session shock and more like another reminder that electoral and institutional uncertainty still sits inside Turkish asset prices.

For now, officials are trying to stop a court decision from becoming a lasting market event. Friday’s trading showed how quickly that transmission can happen in Turkey. The next session will show whether official action can keep the selloff from deepening.