Turkey Set to Lift Short-Selling Restrictions by Late August, Signaling Market Revival

Turkey's financial regulators are preparing to allow the short-selling ban to expire on August 29, marking a significant pivot in the country's stock market strategy. This move aims to draw international capital back into the market by restoring trading mechanisms that attract sophisticated investors.

The restrictions, initially imposed in March in response to market disruption following the Istanbul mayor's detention, had effectively frozen a key trading tool. However, recent market developments have shifted the regulatory outlook. The benchmark index's climb to fresh peaks combined with the central bank's renewed appetite for rate cuts have created conditions favorable for removing trading constraints.

Lifting the ban is expected to unlock greater trading volumes and enhance market liquidity—critical factors in competing for international investor attention. The Turkish authorities have signaled that other emergency measures may similarly be allowed to expire, reflecting growing confidence in market stability.

The timing reflects Turkey's broader economic shift as inflation pressures ease and monetary policy accommodates growth. By restoring conventional trading mechanisms, regulators believe they can strengthen the market's resilience and appeal, positioning Turkey's financial system as an increasingly attractive destination for cross-border investment flows.