In 2025, TCMB's Interest Policy Will Shape Stock Markets
As the year 2024 comes to a close, investors have started to shape their roadmaps for the new year. Anıl Mertol, one of the founders of the social investment platform Ortak, highlighted the significance of the Central Bank of the Republic of Turkey's (TCMB) upcoming decisions in the search for direction in the stock markets and shared his expectations for 2025.
As we enter the final days of the year, Borsa Istanbul continues its quest for direction. Mertol stated that the stock markets could present a positive outlook in 2025 alongside expansionary monetary policies. He detailed his expectations for the new year, stating, “In 2025, the TCMB’s interest rate policy will be decisive for the stock market. The expected interest rate cuts, starting in the last quarter of 2024, have been delayed due to the limited decrease in inflation. However, expectations indicate that the Central Bank will commence interest rate reductions in parallel with the decline in inflation in 2025.”
The high levels of interest rates have directed investors towards fixed-income investment instruments such as deposits and bonds. Additionally, substantial inflows into money market funds have also occurred. On the stock market side, we can state that investor interest has declined in 2024. According to data from the Central Registry Agency, the number of investors, which exceeded 8 million during the year, has now fallen below 7 million.
The lifting of the short-selling ban could increase volumes With the drop in inflation and subsequent interest rate cuts by the TCMB, we expect the risk appetite of domestic investors to increase, leading them back to the stock markets. Accordingly, there may be a resurgence in the number of investors as well. Another factor we anticipate will positively impact the stock market is the lifting of the short-selling ban. As of January 2, short-selling transactions will be permitted on shares in the BIST 50 Index, which we believe could positively affect the trading volumes and depth of our exchange.
Global developments are also significant To predict the trend in Borsa Istanbul, it is essential to monitor developments from abroad as much as those domestically. The trajectory of inflation in the US and the steps the Fed will take in response, the implications of a new Trump era for US international trade and foreign policy, as well as developments in the Middle East and neighboring countries, could also impact our markets. Furthermore, the ongoing credit rating upgrades from rating agencies and the increasing interest of foreign investors are among the agenda items that should be followed closely.