Turkey’s stock market made headlines yesterday after its flagship index—the BIST 100—plunged about 6% during the trading session. The sharp drop reminded investors just how volatile the Turkish market is, but a look at the index’s performance over recent years reveals a far more interesting picture.
The BIST 100 index of the Istanbul Stock Exchange, which includes Turkey’s 100 largest publicly traded companies, has jumped no less than 850% in five years. At first glance, it looks like the Turkish economy is among the world’s strongest. But anyone examining the figure closely discovers a completely different picture: nearly all the surge came from high inflation and the weakening of the Turkish lira.
1+Inflation in Turkey hit a peak of 85.5% in October 2022 and remained high throughout the years that followed. As of August 2026, annual inflation stands at about 31.5%. In total, cumulative inflation during the period crossed the 600% threshold. Meanwhile, the Turkish lira has depreciated by more than 80%. Yes, in 2021 you could buy a dollar for about 8.3 lira, while today it takes about 48 lira to purchase a single dollar.
Therefore, the rise in the index doesn’t reflect real strengthening in the actual value of the companies. Most of the increase in stock prices simply reflects the fact that the amount of lira needed to purchase assets and companies keeps growing.
This is exactly why comparing stock indices during periods of high inflation must account not only for the index price, but also for the currency in which it’s denominated and the erosion of its purchasing power.
The Stock Market as Refuge
Beyond currency depreciation, inflation itself can often drive index gains, because investors may shift part of their savings from nominal assets—like cash and deposits—to assets perceived as capable of preserving their real value. Stocks in companies represent ownership of assets, factories, inventory, business operations, and revenue streams, so during periods of sharp price increases, stock prices may rise even if the investor’s real return isn’t equally high.
1+It’s important to note that Turkey isn’t alone in this phenomenon. Similar processes have occurred many times in other economies that faced high inflation and sharp currency depreciation, with local stock indices simultaneously recording significant gains in nominal terms.