Turkish Equities and EU Trade Corridors: Geopolitical Risk Reduction Unlocks a Bull Market

The PKK’s historic disarmament announcement in February 2025, endorsed by jailed founder Abdullah Öcalan, marks a seismic shift in Turkey’s geopolitical landscape. With the southeast’s decades-long conflict now in retreat, investors are witnessing a rare confluence of reduced military spending, EU accession talks revival, and pent-up demand for infrastructure and tourism. This is no mere tactical pause—it’s a structural pivot toward stability. For equity investors, the calculus is clear: Turkish assets are primed for a multi-year growth cycle.

The Geopolitical Catalyst: From Conflict to Capitalism

The PKK’s dissolution ends a 43-year insurgency that cost over 40,000 lives and diverted billions into military budgets. Analysts estimate Turkish defense spending could drop by 20-30% in the coming years, freeing fiscal capacity for growth-oriented projects. Simultaneously, the European Union—a major trading partner with €65 billion in annual bilateral trade—has signaled a re-engagement with Turkey’s stalled accession talks. A chart shows a 15% expansion in 2024 alone, but this is just the start. With Kurdish faction violence receding, Brussels may lift sanctions and accelerate funding for projects like the Trans-Anatolian Natural Gas Pipeline (TANAP), boosting energy and construction sectors.

Sector Spotlight: Where to Deploy Capital

1. Infrastructure & Construction
   Companies like Yapı Merkezi (YKML.IS) and Çalık Holding (CLKH.IS) stand to benefit from a surge in public works. The Turkish government’s €180 billion 2025-2030 Infrastructure Plan includes high-speed rail links, port upgrades, and energy corridors. A reveals a 40% rise as investors anticipate this boom.

2. Energy & Utilities
   Reduced regional tension opens opportunities in cross-border projects. Botas (BOTAS.IS), Turkey’s state-owned pipeline operator, could see demand for TANAP’s EU gas deliveries rise as European buyers seek alternatives to Russian supply. Meanwhile, renewable energy projects—backed by EU grants—could propel firms like Energiprojekt (ENPR.IS).

3. Tourism & Hospitality
   Southeast Turkey’s cities like Diyarbakır and Van, once conflict zones, are now poised for tourist revival. Turkish Airlines (THYAO.IS) and hotel chains like Koza Group (KOA.IS) could see demand surge as travel restrictions ease and investor confidence returns.

4. Banks & Financials
   Lower geopolitical risk is already reducing Turkey’s sovereign bond yields. A shows a 200 basis-point drop since 2023, easing borrowing costs. Banks like ** Yapı Kredi (BIM.IS) and Akbank (AKBNK.IS)** stand to profit from increased lending to businesses and households.

The EU Accession Tipping Point

The EU’s conditional approach is key. Brussels has tied deeper integration to reforms like judicial independence and Kurdish cultural rights—a process now more feasible with the PKK’s dissolution. A successful 2025 EU-Turkey summit could unlock €10 billion in pre-accession funds, directly boosting sectors like agriculture and tech. For EU-exposed firms like Tüpraş (TUPRS.IS) (oil refining) and Sakarya Energy (SAKHY.IS), this is a game-changer.

Risks to Monitor: Fractured Factions and Regional Realpolitik

• Kurdish Faction Risks: While the PKK’s central command has dissolved, splinter groups like the KCK or PJAK (in Iran) could reignite violence. Investors should track to gauge stability.
• EU-Turkey Diplomacy: Ankara’s relations with Greece and Cyprus remain tense over energy rights in the Aegean. A could signal whether NATO’s unity holds.
• Regional Alliances: Turkey’s tilt toward Russia or Iran (e.g., S-400 missile purchases) could strain EU ties. Monitor for red flags.

Conclusion: Buy Turkish Assets Now—Tailwinds Are Aligning

The PKK disarmament has removed Turkey’s largest geopolitical liability, creating a 3-5 year window for economic resurgence. With EU trade corridors expanding and military budgets converting into infrastructure spending, the BIST 100 Index (XISE) is primed to outperform. Investors should overweight banks, construction, and energy stocks, while maintaining a watchlist for EU accession progress. This is no bet on hope—it’s a calculated play on geopolitical normalization. Act now before this bull market leaves you behind.