Markets Stagnant But Hopeful: Experts Outline 4 Key Conditions For Borsa Istanbul Rally Expectation
Hakan Erdoğan Analysis: Global Liquidity Increase And Structural Reforms Needed For BIST To Strengthen While Inflation Fight Continues
ISTANBUL, Turkey – As global markets prepare for a flood of data following the reopening of the U.S. government, Borsa Istanbul (BIST) continues its prolonged volatility and sideways movement, concerning investors. Amid escalating dollar-based losses, Hakan Erdoğan, Deputy General Manager of Hedef Portföy, painted an optimistic picture. Erdoğan explained the 4 essential factors required for BIST to emerge from its current “lifeless” state and experience a broad-based rally, along with a two-phased outlook for 2026.
📝 The 4 Fundamental Conditions For Broad-Based BIST Strengthening
Erdoğan noted that the exchange is currently concentrated on only a few sectors (like banking) and is failing to achieve a general recovery. He emphasized that four fundamental conditions must align for the market to strengthen overall:
- Macroeconomic Stability: A lasting decline in inflation, stability in central bank policy rates, and controlling currency fluctuations are the most vital elements for restoring investor confidence.
- Global Conditions: Policies from global central banks, particularly the U.S. Federal Reserve (Fed), and global growth expectations are critical for emerging markets. A shift toward increasing global liquidity would be highly favorable for BIST.
- Structural Reforms: Expediting structural reforms within Turkey that attract long-term foreign investors and boost Foreign Direct Investment (FDI) is necessary. Furthermore, these reforms will strengthen the market’s underlying fundamentals.
- Corporate Profitability: Companies must overcome currency and cost pressures to increase their profitability and reflect this value back to investors through dividends and capital appreciation. This action can redirect interest back to equities.
📉 2026 Scenario: H1 Pressure, H2 Rally
Erdoğan analyzes the Borsa Istanbul Rally Expectation for 2026 in two distinct periods:
First Half (Pressure and Volatility):
He agrees with the prediction that 2025 will be marked by the continuation of the inflation fight, leading to ongoing market pressures. Early 2026 inflation pressure could arise from different sources, such as faster-than-expected demand revival, a new global commodity shock, or the continuation of the wage-inflation spiral. This situation could cause the central banks (TCMB and Fed) to slow down or halt their interest rate cutting cycles.
Second Half (Critical Turning Point – Post-April):
Erdoğan views April 2026 and the subsequent months as a critical turning point for BIST:
- TCMB Confidence: April is when the TCMB releases its new inflation report and projections. A clear trend of falling inflation in this report and a defined policy roadmap could renew investor confidence.
- Fed Clarity: U.S. inflation and growth data from the first quarter of 2026 will clarify the Fed’s monetary policy roadmap. Therefore, a more “dovish” stance from the Fed would positively impact emerging markets by increasing liquidity.
- Corporate Earnings: Corporate earnings for the entirety of 2025 and the first quarter of 2026 will clearly demonstrate the impact of the inflationary environment on companies. Signals of profitability recovery will create a strong basis for stock valuations.
🎯 Conclusion: The Fruits Of Patience
In summary, for experts, the first half of 2026 signals the final mile in the fight against inflation, marked by potential volatility. However, the second half of 2026 could open a window of opportunity for patient investors to reap the benefits of the 2025/early 2026 volatility. This transition could signal the beginning of a broad-based and more sustainable uptrend for BIST, initially starting with liquid stocks like banks and expanding across the exchange.
