Abstract:

Price bubbles, which are important for the markets, cause negative effects on the returns of investors in the long run. Bubbles, which significantly affect prices that move according to supply and demand, are considered to be the precursors of financial crises. In this case, it is important to determine on which assets the price bubbles occur. This study focuses not on testing the existence of price bubbles by generalizing the BIST100 index, which is accepted as the leading index in Turkey. Instead, it aims to test all sector indices that are among the components of the BIST100 index for the presence of price bubbles. In this way, price bubbles that may occur in Borsa Istanbul, especially during the pandemic process, will be evaluated in terms of different sectors. During the Covid-19 pandemic, which has significant and negative effects on global markets, price bubbles in terms of 23 different sector indices were analyzed with the Generalized Sup-Augmented Dickey Fuller (GSADF) test using daily opening data for the period 11.03.2020 and 31.12.2020. The findings revealed that the existence of a price bubble was statistically observed in ten sector indices out of 23 different sector indices during the pandemic, while the existence of a price bubble was not obsered in the other 13 sector indices.

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