Turkey ends short-selling ban on stocks after MSCI warns of downgrade

Turkey’s capital markets regulator ended a ban on the short-selling of the largest shares on the Istanbul Stock Exchange.

The decision, which affects shares traded on the BIST 30 Index, reverses a measure introduced in February. The ban will remain in place for trading in other shares, the regulator said in a statement on Tuesday.

The lifting of the restrictions followed a statement last week by MSCI Inc. saying the curbs meant Turkey’s main stock market could be downgraded to a frontier market from an emerging market. Institutional investors were unable to freely express active investment views, MSCI said.

MSCI is a leading global provider of research-based indexes and analytics. It oversees the benchmark MSCI Emerging Markets Index, as well as individual country indexes such as the MSCI Turkey Index.

The BIST 30 fell by 0.6 percent to 133,909 points in midday trading on Wednesday.

Turkey has sought to prevent short selling of stocks and the lira during times of economic and market volatility. The lira dropped to a record low of 7.269 per dollar in early May, partly due to concern about the country’s unorthodox economic policies.