‘Daddy, I am cold’Ō
Turkey suffered great loss UNFORTUNATELY, of life as a result of earthquakes that covered a large area of provinces like Kahramanmaras, Hatay, Gaziantep, Adana, Adiyaman, Kilis, Osmaniye, Diyarbakir, Malatya, and Sanliurfa.
These 10 provinces account for 9.3% of Turkey’s annual GDP, according to 2021 data. Gaziantep and Adana each have a 2% share. Then Hatay, Kahramanmaras, Diyarbakir, Sanliurfa, Malatya, Osmaniye, Adiyaman and Kilis are listed.
The economic value created by these provinces in the earthquake zone in 2021 was TRY 675bn. As the 2022 GDP figure has not yet been released, we do not know but it is estimated to reach approximately TRY 1.4tr.
Home to 16% of the country’s population, that is, approximately 13.5 million people, exports of approximately USD 20bn were realized in 2022 from these lands. The regional leader Gaziantep alone makes USD 10.5bn followed by Hatay with USD 3.6bn, Adana with USD 3bn, Kahramanmaras with USD 1.5bn, and Malatya with USD 455m.
Memis Kutukcu, Head of the Supreme Organization of Organized Industrial Zones (OIZs), stated that there are 36 active industrial zones in 10 provinces affected by the earthquake, and 11 buildings in total were destroyed in two of them (one in Adiyaman and one in Turkoglu district of Kahramanmaras). Industry and Technology Minister Mustafa Varank, on the other hand, said that neither in OIZs nor out of them, there was no destruction in the production facilities that would harm production.
The earthquake will not zero out production or exports of course, but material damage, energy supply, and distribution problems in production facilities, especially in the workforce, and problems in nearby ports will cause losses, the level of which is not easy to predict.
But none of this can be compared with even a single breath of a child crying under the rubble saying “Daddy, I’m cold.” I wish God’s mercy on our brothers who lost their lives. I convey my best wishes to our injured citizens and their relatives.
BORSA ISTANBUL DEBATE
Borsa Istanbul, which started the week with the news on the earthquake disaster, was caught in the middle of two big discussions. The first is that the operations were not halted immediately after the earthquake. Despite short selling and pre-deposit requirement imposed by the Borsa management on Monday morning, the sales continued. Many investors announced their complaints on social media that the transactions should be stopped.
As a matter of fact, in such a painful period, it was not possible for 381,463 investors (portfolio size of TRY 56.2bn) in 10 provinces affected by the earthquake in the region, and
investors in other provinces, who were worried about the lives of their relatives, to be interested in the stock market. The Stock Exchange, which was closed for seven days during the 1999 earthquake, was kept open this time. On Monday, Tuesday, and Wednesday, the BIST 100 index fell by more than 16%. On the morning of the third day, when the decline exceeded 7% in the index, the transactions were stopped. It was announced that the transactions made on Wednesday were canceled and there would be no transactions for five working days.
The 39th article of the Borsa Istanbul A.S. Regulation on Principles Relating to Exchange Activities gives this power to Borsa Istanbul management: “Upon the occurrence of emergencies, the Board of Directors may decide to temporarily close the marketplaces, markets, platforms, and systems operating in the Exchange for a period up to five trading days. The Board of Directors may delegate its power to General Manager. Decisions of temporary closing for more than five trading days are taken by the Board of Directors and presented to the Board for approval.”
The subject of the second discussion was the jump in the shares of cement companies while the transactions were going on. While a historical tragedy was experienced in the region where 13.5 million people live, share prices rose with the expectation that the rebuilding of destroyed or damaged buildings and infrastructure would increase the demand for cement. But this rise brought a lot of criticism and even anger.
THE WEEK AHEAD
Balance of payments, retail and turnover indices, the residential property price index for December, budget results for January, and house sales data will be on the economic agenda of the week. In addition, the results of the Turkey Life Satisfaction Survey for 2022 will be announced on Friday morning.
On Tuesday and Thursday afternoon, the U.S. consumer and producer inflation data will be the critical indicator that will guide global markets and risk appetite.