Ηow Turkish ruling Islamic elite manages intervention by central bank or regulator of Stock Exchange

On 16 September 2026, Borsa İstanbul activated the intra-session market-wide circuit breaker (Endekse Bağlı Devre Kesici) when the BIST 100 fell 6% (a halt). Since 1 September 2025 the mechanism for halting trading has been single-threshold: it is triggered when the BIST 100 falls 6% or more from the previous close (previously there were two thresholds, 5% and 7%).

This gives the regulatory authorities greater room for intervention. The breaker/halt temporarily stops trading in the equity market, in equity/index derivatives and in equity repo, so that new orders can be collected and panic selling and a further drop can be avoided. The immediate cause of the decline was not a macroeconomic shock, but a liquidity crisis in investment funds. The funds sold the most liquid stocks in the index in order to raise cash, thereby amplifying the fall, and so on. In the background are recent regulations that restricted concentrated positions in low-float stocks, after concerns about market quality; these rules have further strengthened the authorities’ ability to intervene in the stock market. 16 septemper’s episode therefore looks more like a liquidity-driven fire sale than a structural collapse of the Turkish economy. The risk is that it could become structural if foreign investors demand a higher risk premium, higher CDS spreads and lower equity valuations, or if redemptions from the funds continue and spread to more managers. For a better understanding of this incident, and of the strengthening of defensive and intervention mechanisms in Turkey’s stock market, it is useful to clarify the terms equity risk and Country Equity Risk Premium (e.g. for Turkey), as well as — in our view — our older but still timely analysis of how the Turkish ruling Islamic elite (political and business) understands the economy. Equity risk (that is, the risk of investing in equities) is measured as the extra return investors require above the interest rate (which they can in any case earn without risk — or so they think, or wish to appear to think) in order to hold stocks rather than government bonds. The Country Equity Risk Premium (e.g. for Turkey, which is our main subject in explaining what happened yesterday) is measured according to the formula: mature-market return (e.g. the United States) plus country risk premium. The country premium is often calculated from the CDS or the sovereign default spread, multiplied by the ratio of equity volatility to bond volatility. Thus a jump in CDS or a sharp drop in the BIST raises the required premium for Turkish equities. In practice, after the fund sales of 16 September, Turkey’s implied equity risk rose more than sovereign CDS: prices fell because of a lack of liquidity, not because of worse corporate earnings. If foreign investors do not accept this new level, they will demand a larger discount in valuations and, consequently, prices will fall further. These clarifications are useful, I think, because: Forecasts of a collapse of the Turkish economy over the last decade have not been confirmed.

Our analysis has shown how the Turkish ruling Islamic elite sees and manages the economy — often unconventionally by Western standards (especially regarding interventions by the central banker or the regulator of the Istanbul Stock Exchange): as a Second War of Independence (the First being that of Kemal). In this framework, problems in the economy or in the stock market are treated as direct blows to national sovereignty and are met with a corresponding response. By way of illustration I attach links to our analysis of how the Turkish Islamic ruling elite understands the Islamic Turkish economy: Erdoğan’s “second” war of independence (2021): https://www.militaire.gr/o-deyteros-polemos-anexartisias-toy-erntogan-d-pantis/ and here: https://pantislawoffice.blogspot.com/2021/12/blog-post_23.html Turkish Islamic economy and banking, Islamic elite, Arab-Turkish competition in the emerging Islamic geopolitical space (2021): https://pantislawoffice.blogspot.com/2021/12/blog-post_7.html The economic-monetary crisis in Turkey and the economic agreements with the UAE: https://pantislawoffice.blogspot.com/2021/11/blog-post_29.html General background of Islamic political strategy (indicative): Hellenism facing contemporary Turko-Islamism, Militaire News, 24/07/2020: https://www.militaire.gr/quot-o-ellinismos-mprosta-ston-sygchrono-toyrkoislamismo-quot/ https://pantislawoffice.blogspot.com/2021/01/blog-post_29.html My article in GR DIPLOMATIC CD (April 2021): The strategic challenge of MAVI VATAN (Blue Homeland): https://pantislawoffice.blogspot.com/2021/04/gr-diplomatic-cd-mavi-vatan.html Hellenism and Turkish Islamism (2021): https://pantislawoffice.blogspot.com/2021/06/blog-post.html “Hellenism facing contemporary Turko-Islamism,” 24/07/2020: https://www.militaire.gr/quot-o-ellinismos-mprosta-ston-sygchrono-toyrkoislamismo-quot/