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Turkish stocks drop 3 pct, government debt fears weigh
Turkey’s markets are closed from midday until Friday for a national holiday. The yield on the benchmark Aug 3, 2011, bond rose slightly to 8.58 percent from 8.55 percent on Tuesday. The lira eased to 1.4955 against the dollar from the previous day’s 1.4920 on the interbank market.
The main stock exchange index dropped 2.96 percent to 48,906.95 points. The index is up around 85 percent since the start of the year, higher than any other emerging market apart from Russia. The emerging markets equity index went down 2.2 percent, its biggest one-day fall since mid-August. “We can say a correction, which had been waited for many months, has started. This movement is very delayed. The stock market’s was such a sharp rise,” said Osman Büyükgöksu, general manager of Ata Investment Securities. The index could dip to levels around 45,000 and the sales in the bond market were a factor that might backed the selling in the stocks, he said.
Traders said rising nervousness about Turkey’s public sector borrowing requirement and the belief that the Central Bank was nearing its monetary easing cycle spurred sales in the bond market, lifting the yields. “Turkish stocks are being affected by the volatility in the S&P .SPX but also the volatility in other emerging markets like South Africa. We are seeing some portfolios take profits,” said Öner Gencal, chief investment officer at HSBC Turkey.
The Treasury’s debt rollover ratio is expected to be 110 percent this year and the government’s medium-term fiscal plan failed to ease concerns generated by expectations that the Treasury will borrow heavily in 2010. Absence of the International Monetary Fund loans is an additional factor making investors increasingly reluctant to boost their bond portfolios.
“As long as Poland, Hungary and others stay volatile, Turkey will follow. Fixed income markets are also affecting stocks -- local traders want to see what is happening with the interest rate markets next year due to the redemption program,” Gencal said.
A military investigation into a suspected army plan to discredit the ruling Jutice and Development Party (AK Party) had little impact on markets on Wednesday, traders said. Akbank fell 2.29 percent to 8.55 lira after it said third quarter net profit almost doubled, helped by a 36 percent increase in net interest income after central bank rate cuts, though the bank’s rate of non-performing loans also rose.
Petrol Ofisi, the country’s biggest fuel retailer, plunged 6.35 percent, extending losses a day earlier after the energy market watchdog EPDK started an investigation over alleged violations of fuel standards.
Petrol Ofisi is accused of tampering with a substance added to gasoline to ensure it is taxed, according to the state regulator, a source told Reuters.
Turkish petrochemical producer Petkim posted net profit of 24.5 million lira in the third quarter, following 35.38 million lira loss in same period last year. The company statement came after the stock market closed.
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