Central Bank's interest rate policy will be the deciding factor in stock markets in 2025

With the end of 2024, investors have begun to determine their strategies for 2025. According to experts, the direction of stock markets in the new year will be shaped by the interest rate policies of the Central Bank of the Republic of Turkey (TCMB).

EXPECTATION OF INTEREST RATE CUTS

It is noted that the interest rate cuts expected to begin in the last quarter of 2024 were postponed due to the limited decline in inflation. However, there is a general expectation that the TCMB will begin interest rate cuts in 2025 as inflation enters a downward trend.

It is stated that high interest rate levels have directed investors primarily toward fixed-income instruments such as deposits, bonds, and money market funds.

It is recorded that investor interest has decreased throughout the year, and according to Central Securities Depository data, the number of investors, which had exceeded 8 million, has fallen below 7 million.

LIFTING OF SHORT-SELLING BANS COULD CREATE A POSITIVE EFFECT

If interest rate cuts occur in 2025 in parallel with the decline in inflation, it is expected that the risk appetite of domestic investors will increase and they will turn toward stock markets. Furthermore, the resumption of short-selling transactions for shares in the BIST 50 Index as of January 2 is seen as a positive development that could increase trading volumes and market depth.

GLOBAL EFFECTS MUST ALSO BE CLOSELY MONITORED

Movements in Borsa Istanbul are influenced not only by domestic developments but also by global factors. It is stated that inflation in the US and the Federal Reserve's policies regarding it, changes in US international trade and foreign policy, and political and economic developments in the Middle East and neighboring countries could create significant effects on stock markets.

In addition to this, potential improvements to Turkey's credit rating by international credit rating agencies and the increasing interest of foreign investors are among the other topics that should be followed for 2025.

News Source: 12punto