Turkey is preparing to let its five-month ban on short-selling stocks expire on 29 August, a move expected to boost trading activity and improve the market’s appeal to global hedge funds and institutional investors, according to a report by Reuters citing unnamed people familiar with the matter.
The restriction was imposed in March to contain volatility following the arrest of Istanbul’s mayor, Ekrem Imamoglu. Authorities extended the measure three times, but officials now plan to allow it to lapse as the country seeks to normalise market rules and attract foreign capital.
Market participants say the end of the ban could increase liquidity and restore the ability of hedge funds to run long-short strategies in Turkish equities, a tool widely used to hedge risk in volatile emerging markets.
Turkey’s Borsa Istanbul 100 Index has climbed 17% in lira terms this year, hitting fresh record highs as the central bank resumed interest-rate cuts. Foreign investors currently account for around 40% of Turkish equity ownership, below the historic average of 60%.
The expiry of the short-selling ban follows other steps to unwind crisis-era measures, including the phase-out of a government-backed savings scheme tied to currency protection. Officials have signalled that further easing of market restrictions, such as relaxed buyback rules, could also end.
