Türkiye lifts four-month short-selling ban as Iran war fears ease

In Türkiye, Borsa İstanbul management immediately lifted the short-selling ban, which had been in effect for approximately four months, starting with the trading session on 29 Haziran. The lifting of the ban indicates that officials are confident the market volatility triggered by the war between ABD-İsrail and İran has now eased. Short selling is a strategy that involves investors borrowing and selling shares, aiming to buy them back at a lower price in the future to make a profit. This practice had been banned starting 2 Mart, the first trading day after the outbreak of the Gulf conflict. The ban, which was renewed every month and extended until the end of Haziran, was implemented to reduce the likelihood of the İran war causing major devastation in local and international markets.

According to statements made by market analyst İris Cibre, the decision not to renew the short-selling ban was made because the impact of the İran war on financial markets has significantly decreased. Although the ban is thought to have helped reduce volatility during its existence, Borsa İstanbul followed a highly complex course in recent months. The market's benchmark index, BIST 100, which opened just below 11.500 points at the beginning of the year, showed a strong rally, surpassing the 14.000-point barrier in mid-Şubat. However, after the start of the war, it retreated to approximately 12.000 points in the second week of Mart, and the atmosphere of uncertainty made investors nervous.

Despite this, the BIST 100 index demonstrated the market's recovery potential by reaching an all-time high of 15.062 points on 11 Mayıs. In the first trades made on the morning of 29 Haziran, when the ban was officially lifted, the index traded at a level just above 14.200 points. This figure indicated an impressive 26 percent increase compared to the beginning of the year, revealing that despite the crisis periods, there was an increase in value in the market. The dissipation of the global uncertainty environment created by the İran war allowed officials to renew their confidence in the market. Stock exchange officials announced that this important decision was made in order for the market to return to its normal functioning and become compatible with international standards.

While the lifting of the short-selling ban is promising in terms of market efficiency, it does not mean that foreign investors will rapidly return to Türkiye. Analyst İris Cibre warns that this decision alone will not trigger a flow of overseas funds into Türkiye. Although foreign investors have always criticized the short-selling ban due to concerns over market efficiency, according to Cibre, the root of the problem is much deeper. Structural issues such as insufficient market depth, inflated stock prices, manipulation risks, and weaknesses in hedge fund mechanisms are among the main factors deterring foreign capital. Experts emphasize that if Türkiye wants to attract international investors, it needs to resolve these profound and structural problems.

This four-month ban was not the first instance of Türkiye suspending short-selling practices; the stock market had previously made similar decisions during periods of instability. Last year, short-selling transactions were also halted between Mart and Ağustos following violent market turmoil after the arrest and subsequent imprisonment of İstanbul Belediye Başkanı Ekrem İmamoğlu, who is seen as the opposition's 2028 cumhurbaşkanlığı candidate. On the other hand, the high inflation problem, further fueled by the impact of the İran war, continues to severely suppress the Turkish economy. The rise of annual consumer inflation to approximately 33 percent in Mayıs reveals how heavy the economic pressures on households and investment decisions are.