Borsa Istanbul is considering cutting the last two digits from its benchmark BIST-100 index and is discussing the issue with local market participants, Himmet Karadag, head of the stock exchange, told Bloomberg on June 20.

The BIST-100 tested a new record high of 100,001 on June 13, prompting the exchange to consider reusing a psychological ploy that was actually first used 20 years ago.

Borsa Istanbul last lopped two digits from its benchmark index at the beginning of 1997 when the index closed in on six figures. The rebasing triggered a 64% m/m jump in the BIST-100, with the index rising 254% y/y by the end of 1997.

“It’s not something that will happen within a few days, but we’re working on it,” Karadag reportedly added.

Removing digits from the index does not have an impact on the valuation metrics of the stocks. However, the move may psychologically lead market players to perceive Turkish stocks as cheaper and thus may trigger further inflows into the equities, Baris Buyukdemir, general manager of Istanbul-based brokerage house Ceros Securities, told Bloomberg.

The total equities inflow so far this year tops $2.2bn and there has been an overall inflow of $3.06bn into debt securities.

Turkey's financial markets have performed well so far this year. International investors have shown strong interest in Turkish assets despite the range of political and economic woes amid Turkey's extended and indefinite state of emergency.

Markets have given a positive reaction overall to the narrow Yes vote for an executive presidency in the April 16 referendum. However, concerns over the future economic and political outlook are still strong.

The BIST-100 was up 0.23% d/d to 99,557 as of 11:00 local time on June 20 while the Turkish lira gained a limited 0.08% against the USD to trade at 3.5204. The annual gain on the index stood at 27%.

Turkish stocks still trade at a discount of almost 30% to emerging-market peers, according to Bloomberg data.

Better-than-expected macro indicators have supported the performance of Turkey's financial markets despite concerns over the accuracy of the statistics institute’s controversial revisions in its methodologies. However, a solid set of geopolitical risks, which now also includes the Qatar crisis, pose threats to the outlook.

Political uncertainties in the US over President Donald Trump’s future curbed expectations for offensive rate hikes by the FED. Consequently, portfolio inflows to emerging markets escalated during recent months.

Assessing the Turkish stock exchange's inflows in the year to date, markets are suspicious that an unknown big fund trading with algorithms - “The Dude” as local traders refer to it - is behind the unexplained rally that has taken place since the beginning of 2016.

End-2017 Turkish inflation expectations have risen from 9.53% in May to 9.55% in June. In April, Turkey’s central bank revised up its end-year inflation expectation for 2017 to 8.5% from its previous forecast of 8%.

The World Bank is forecasting a quickening of annual inflation to 9% at the end of 2017 from last year’s 8.5% while the OECD raised its 2017 CPI inflation forecast for Turkey to 10.4% in its June Economic Outlook forecast from its previous forecast of 7.7% given last November.