Borsa Istanbul suffered a severe sell-off on May 21 after an Ankara appeals court removed main opposition Republican People’s Party (CHP) leader Ozgur Ozel from his post and ordered the immediate reinstatement of his predecessor, Kemal Kilicdaroglu.

The move throws Turkey’s political landscape into another period of deep instability.

The 36th civil chamber at the Ankara regional (istinaf) court issued a rare ruling of “absolute nullity” (“mutlak butlan” in Turkish), legally erasing the CHP’s 38th ordinary congress held in November 2023.

Screenshot: The 36th civil chamber’s ruling (Credit: @CanBursali).

At the congress, Ozel unseated Kilicdaroglu, 77, following the defeat of the latter by President Recep Tayyip Erdogan in the 2023 presidential elections.

By declaring the leadership election legally void from its inception, the court ruled that Ozel’s current executive administration has been stripped of authority. The court also officially ordered that the CHP’s former management temporarily return to power to steer the party ahead of the next elections.

Borsa Istanbul down, lira remains in headlock

The decision ignited panic at Borsa Istanbul, disrupting a period of relative market stability. The benchmark BIST-100 index plunged more than 6% within minutes while the banking index tumbled by over 8%.

The rapid sell-off triggered automatic market-wide circuit breakers, halting all stock, options and futures trading. Since the ruling was announced just an hour before the market close, the spot transactions were not re-started. The fall in the derivatives market, which moves into an evening session that lasts until 23:00 Istanbul time, hit the daily limit of 10%.

The initial reaction seen in Turkey’s 5-year credit default swaps (CDS) was more limited. The headline figure moved by about 10 bp to break through the 250-level. Similar moves were observed in Turkey’s eurobonds.

The USD/Turkish lira (TRY) pair, which is subject to the strict control of the government, remained unchanged in the 45s. In the coming days, the Turkish central bank’s FX reserves will be under close scrutiny.

Battering the CHP

Since October 2024, the CHP has been battered by countless operations launched by prosecutors. Its presidential candidate, Istanbul mayor Ekrem Imamoglu, has been in jail since March 2025.

Some 23 CHP mayors were in jail as of May 21 in addition to many other party officials, municipality personnel and family members of the personnel.

The lawsuit that has resulted in the reinstatement of Kilicdaroglu was initially filed by CHP delegates loyal to the ex-leader, who argued that the 2023 congress as well as two subsequent extraordinary congresses were influenced by bribes paid to purchase votes of delegates that went against Kilicdaroglu.

In October, the Ankara 42nd (Asliye Hukuk) civil court of first instance dropped the case. The plaintiffs, who are also CHP members close to Kilicdaroglu, filed an objection against this ruling at the Ankara (istinaf) regional court.

Turkey plunged into fog again

According to the relevant legal procedure, the 42nd court will launch a re-trial process. The Ozel management has the right to appeal against the regional court’s Kilicdaroglu decision at the supreme court (yargitay).

Ahead of the ruling, pro-government media this week carried messaging signalling that an “absolute nullity” ruling was on the way. They pointed to Friday (May 22) as the day to expect the announcement.

As a result, Ozel and his central executive board were on May 21 already holding an extraordinary meeting. At the time this story was compiled, they were yet to announce their plans.

On May 20, 77-year-old Kilicdaroglu, who chaired the CHP between 2010 and November 2023, released a highly critical video aimed at the current party leadership, asserting that the CHP would never become a sanctuary for illegality or corruption.

Once again, national politics have become the main concern in Turkey. All eyes will now be on how the dust will settle as this new clash unfolds in the coming days.

Istanbul trustee knocked out too

The 36th chamber also ruled the CHP’s Istanbul congress held in preparation for the November 2023 party congress null and void. Consequently, it moved to reinstate the previous management. Since the previous Istanbul chair Canan Kaftancioglu has been banned from politics by a local court, the 36th chamber re-instated one of Kaftancioglu’s deputies.

The board of trustees appointed at CHP Istanbul will be replaced.