The Turkish stock exchange suspended trading after the continued decline in prices following the catastrophic series of earthquakes in the country. It’s the first time in 24 years that trading in Turkish stocks has been halted, and that’s bad news, says BNR in-house economist Han de Jong. “The merchants have a break.”
De Jong says it stands to reason that volatility in the Turkish stock market was high due to the earthquake. “Monday there was still a small loss, yesterday there was a big drop of about ten percent and this morning the shares are down even more,” he says. ‘So the uncertainty is very big, and in situations like that people sometimes decide to close all trades. This gives everyone time to think about how to proceed. A breather, if you like.’
As an example, De Jong cites the earthquakes in Turkey 24 years ago, when the stock exchanges were also closed. Just like what happened in the US when the 9/11 attacks happened. Then the stock market stopped for a week there too.
“It shouldn’t be closed for long”
According to De Jong, it is not yet known how long the stock markets will remain closed. He also warns that the market shouldn’t stay closed for too long, as this will only increase uncertainty. “You always get criticism of these kinds of decisions,” says De Jong. “On the one hand there are people who think it should have happened immediately on Monday, because then there would be no respect for the victims.”
While De Jong thinks there is something to be said for this, he also understands traders. “They can’t act now, and that’s bad for the economy,” he continues. ‘And there are other parties that see investment opportunities that they want to take advantage of, but that’s not possible right now. So there’s always a little bit of frustration.’
Wise
But, De Jong acknowledges, it was a sensible measure. “We have to realize that relatively many normal people invest in stocks in Turkey,” he concludes. “The stock market has been a good hedge for inflation.” De Jong argues that it is undesirable to expose so many people to the intense volatility that prevails in Turkey. “But that shouldn’t take too long.”
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
