Shares in Turkish cement companies nosedived on October 9 after Turkey launched a major military operation to clear Kurdish forces out of parts of northeast Syria, prompting the European Union to say that Ankara should not be counting on any financing from the bloc for planned home-building for refugees in the region.

Earlier this week, the share prices of the companies soared around 20% ahead of the operation. That was on expectations that Turkey would create a buffer and “safe” zone inside Syria and build homes there for up to two million of the three to four million Syrian refugees currently living in Turkey.

Last month Turkish President Recep Tayyip Erdogan announced his plan to create the zone along the Syrian-Turkish border where the Ankara government envisages the creation of 140 villages and 10 towns to accommodate up to one million people.

Three-bedroom houses, schools, youth centres, mosques, and sports centres would be built in those villages and towns, Erdogan said, adding that this massive project would cost around $26bn.

Rushed to buy shares

After Erdogan unveiled his plans, investors rushed to buy shares in Turkish cement companies even though the president did not explain where the money would come from to finance such a large-scale project. Most probably, Erdogan was hoping to secure funds from the west. 

However, European Commission President Jean-Claude Juncker said on October 9:  “If the plan [the military incursion] involves the creation of a so-called safe zone, don’t expect the EU to pay for any of it.”

Shortly after Erdogan announced his plans for creating towns and villages for Syrian refugees, shares in Mardin Cimento rose around 20% while Adana Cimento saw its share price rise 10%. Shares in construction materials producer Yibitas also jumped 20%.

However, those stocks suffered on October 9 as soon as the military offensive in Syria started.

Shares in Adana Cimento declined 6.4%, Afyon Cimento’s share price dropped 3.5% and Konya Cimento’s share price fell 4.4%.  Bolu Cimento and Aslan Cimento saw their shares decline 3% and 4%, respectively. The decline in Mardin Cimento shares was a limited 0.19%.

The main stock exchange index, BIST-100, was down 2.17% d/d.