Turkish Market Shows Positive Trends Amid Ukraine Peace Efforts and Inflation Expectations

BIST 100 Index Reflects Growing Optimism

The Turkish market is currently exhibiting positive trends, with the BIST 100 index at Borsa Istanbul closing last week up 3.38% at 10,922.86 points. This upward movement is largely attributed to a confluence of factors, including renewed efforts to de-escalate the Russia-Ukraine conflict and a more favorable outlook on domestic inflation. Investment reports have highlighted the BIST 100's robust performance in 2024, with an annual gain of 34%, and forecast continued growth to record levels in 2025. The index reached an all-time high of 11,529.81 in late August 2025.

Progress in Ukraine Peace Negotiations

Significant diplomatic activity surrounding the Russia-Ukraine war is contributing to the positive market sentiment. Efforts to end the conflict are reportedly entering a critical phase, with a new U.S.-backed 28-point peace plan gaining prominence. Reports suggest that a ceasefire agreement could be secured soon. On November 23, 2025, U.S. Secretary of State Marco Rubio led productive talks in Geneva, indicating substantial progress in narrowing down unresolved issues within the peace framework. Furthermore, Ukrainian President Volodymyr Zelenskyy held discussions with Turkish President Recep Tayyip Erdogan in Turkey on November 19, 2025, underscoring Turkey's role in the peace process.

Expectations of Lower Inflation Drive Market Confidence

Anticipations of lower inflation are playing a crucial role in bolstering the Turkish market. The Central Bank of the Republic of Türkiye (CBRT) is expected to initiate an interest rate cut cycle, potentially starting in December 2024, in line with a projected decline in inflation. Market participants have adjusted their year-end inflation expectations to 32.2% and foresee at least a 100 basis points cut at the December Monetary Policy Committee (MPC) meeting. The monthly consumer inflation expectation for November 2025 rose to 1.59%, which could lead to an annual rate of 32.02%. The 12-month ahead inflation forecast has been revised to 23.49%. The CBRT has maintained a tight policy stance, with the policy rate at 39.5% as of November 2025, to ensure price stability.

Potential Economic Benefits of Peace

A resolution to the Russia-Ukraine war is expected to yield considerable economic benefits for Turkey. A ceasefire could generate positive momentum across various sectors, particularly

• construction and contracting, driven by potential reconstruction efforts in Ukraine
• the food sector
• and tourism.

Moreover, an end to the conflict could alleviate global pressure on commodity prices, which would be advantageous for Turkey's current account balance, given its status as a net energy importer. Turkey's current account has already recorded a surplus for three consecutive months, partly supported by lower energy prices and robust tourism revenues.