The Istanbul stock exchange’s benchmark BIST-100 index has lost as much as 10% since the end of January. The index saw its historically highest level of 121,531.5 during intra-day trading hours of January 29 before gradually descending to a 2018 trough to date of 106.624 during intra-day hours on April 11.

The index lost a chunky 5% from the April 6 closing price of 114,738 to the April 11 closing price of 109,253. Some $20bn was thus erased from the value of Turkey’s equities. The rapid depreciation of the Turkish lira (TRY) amid investor anxiety over economic imbalances, rising geopolitical risks linked to the fraught situation that has developed over conflict-torn Syria and signs that conglomerates are struggling to pay their debts have all weighed on stocks.

The recent sell-off is also very much seen as a result of recently declining capital inflows into the emerging markets universe due to likely upcoming Fed rate hikes and planned monetary tightening by the major central banks that have come on top of Turkey’s solid set of country-specific risk fields, which include sticky double-digit inflation, a surging current account deficit, debt restructuring applications from conglomerates to Turkish lenders, domestic political tensions and concerns over the application of the rule of law amid the country’s 22-month-old state of emergency.

This year is by now regarded as a tough year for the Borsa Istanbul particularly as major central banks are drawing up monetary tightening agendas and the country-specific risks do not show any signs of de-escalation. In addition, expectations for early parliamentary and presidential elections are still strong, despite denials from the government officials.

Technical analyses have also started to signal a reversal of the stock market’s rising trend, which has continued since 2016. Bloomberg Markets on April 13 warned that the BIST-100 was trading below its 50-, 100-, 200-day moving averages. Bollinger bands, channel lines, the directional movement index and relative strength indicators are also pointing to a newly negative direction.

Turkey’s foreign-currency corporate debt amid the country’s debt-fuelled and consumption-driven ‘warp-speed’ growth is equal to about 40% of economic output and its cost has been climbing every day lately, putting the nation’s companies in a tight spot. The fact that some of Turkey’s biggest conglomerates are trying to seal the renegotiation of billions of dollars in loans has led to investors anticipating possible trouble at Turkey’s banks.

The losses in banking assets on the bourse, relatively speaking, are coming in higher. Bourse Istanbul’s banking index fell as much as 21% from the year’s highest level of 194,029, seen during intra-day trading hours of January 29, to an intra-day lowest level of 153,758 on April 11.

The banking index was down 0.76% d/d to 157,147 at closing prices on April 15.

Total outflows from the Istanbul stock exchange have amounted to $478mn since the beginning of 2018, according to the latest data from the central bank. Outflows totalled t$784mn during a two-month period from February 2 to April 6.

The bourse's total equities inflow in 2017 topped $3.34bn, in line with the scope of portfolio inflows recorded for the emerging markets universe. That drove the Bourse Istanbul to many all-time highs last year.

Consequently, the BIST-100 rose by 48% y/y to 115,333 at the end of 2017.

Local traders were last year suspicious as to whether an algorithm, referred to as "Herif" in Turkish or "The Dude" in English, trading with high volumes was behind the skyrocketing stock market but The Dude has gone quiet amid the losses this year.

The latest balance of payments data pointed to $297mn worth of net portfolio outflows in February.

“The reversal of portfolio inflows is a concern, as they have been funding half of the current account deficit, so if they reverse this causes double trouble for the central bank,” Timothy Ash, an analyst at Bluebay Asset Management, said in an e-mailed comment.