The impact of the U.S.-Israel-Iran war on BIST transportation and defense stocks: An event study approach

On February 28, 2026, with U.S. involvement in the Israel-Iran tensions, the process took on a broader geopolitical character as the U.S.-Israel-Iran war. Such geopolitical developments may increase uncertainty in financial markets and generate sector-specific effects on stock returns. In this study, the short-term pricing behavior of the shares of transportation and defense companies traded on Borsa Istanbul around the first trading day, accepted as the beginning of the war, is examined using the event study methodology. For this purpose, using the daily closing prices of the relevant stocks, average abnormal returns (AAR) around the event day and cumulative average abnormal returns (CAAR) across different event windows were calculated, and their statistical significance was analyzed. The AAR findings for transportation stocks indicate that positive effects were observed on some days before the event date, while negative effects were observed on others. The strong negative effect on the event date shifted to positive pricing, reflecting rebound buying on the first trading day following the event. The CAAR findings reveal that although daily effects varied in direction, the negative effect on transportation stocks accumulated within asymmetric windows spanning the event date and preceding days. In defense stocks, while positive pricing behavior stood out on the event date and the day before it, negative effects were also observed on some days before and after the event date. The cumulative results indicate that the positive effect accumulated particularly in asymmetric windows covering the event date and the preceding days, as well as in narrow symmetric windows close to the event. The overall picture shows that the same geopolitical shock generated short-term negative pricing in transportation stocks through the cost channel and short-term positive pricing in defense stocks through defense and security spending expectations, but that the post-event effect weakened in both groups.