Turkey’s markets take a dive as euro tumbles on debt woes

The benchmark index (İMKB-100) ended the first session at 56,462.09 points after falling 2.53 percent over the close the previous day.

İş Yatırım Stock Exchange Department Manager Orhan Veli Canlı commented on the market’s plummet on Friday, blaming the deterioration in the international investment climate as the main factor behind the decline. “A sell-off wave came at a time when the İstanbul bourse was showing a far better performance than the rest of the world,” he said.

Meanwhile, the lira also lost value against the dollar in parallel with movement in the euro/dollar currency rate, which fell below 1.25. One dollar was being traded at TL 1.53 in the morning.

Elsewhere, Credit Suisse issued a report on Friday lowering its expectation as regard the rate of return for the Turkish stock market from 20 percent overweight above the benchmark index to a level equal to the benchmark index.

The report said the Turkish stock market was one of the fastest among the capital markets in the Europe, Middle East and Africa (EMEA) region to return to its pre-crisis levels. However, the report stated, company valuations are slightly higher in the Turkish market compared to those in other markets with similar conditions.

Canlı pointed out that the sell-off was usually on finance sector shares, which he called “a meaningful situation” given the recent positive financial statements of Turkish banks. “It is hard for the Turkish markets to rally without a positive move abroad. The trend seems to be going downward a little. The 56,000 points are a very important level of resistance and if that is broken, the index may dive to as low as 53,000 points,” he commented.

Gold breaks new record

The euro hit an 18-month low versus the dollar, and European shares fell sharply on Friday on speculation that fiscal austerity in some eurozone countries may stifle economic growth.

High-risk assets including stocks took a hit, and worries about the eurozone debt crisis prompted demand for safer investments, pushing gold to a record high while the dollar hit its strongest versus a currency basket in a year. Gold prices, which often climb in times of risk aversion, soared to a record high of $1,248.95, while the yellow metal priced in euros, sterling and Swiss francs also hit its strongest ever.

European authorities announced a massive debt safety net for Greece, Spain and Portugal this week, but investors remain skeptical whether those countries can take the pain of overhauling their poor public finances.

Such uncertainty drove the euro as low as $1.2433 according to Reuters data, its weakest since November 2008, having broken through options barriers at $1.2500 and $1.2450.

“The uncertainty brought about by sovereign risk is pushing markets lower,” said Nick Parsons, head of markets strategy at nabCapital. “Until we get clarity about whether austerity measures can be implemented, risk markets will head lower.”

Such uncertainty pushed the MSCI world equity index down 1 percent, while the FTSEurofirst 300 index fell 2.0 percent. US stock futures pointed to a lower opening on Wall Street.

US crude oil fell roughly 2 percent on the day to hit a three-month low of $72.72 per barrel.

Risk aversion boosted bond markets, driving the June bund future up 62 ticks to 126.48.

Akfen shares start trade on bourse

Shares in Akfen Holding, which launched an initial public offering (IPO) on May 5-7, began trading on the İstanbul Stock Exchange (İMKB) on Friday.

Akfen shares traded 8.8 percent higher at TL 13.60 on their first day of trading on Friday. Publicly traded shares make up 7.12 percent of the company, which has interests in the energy sector and airport ground services. Speaking as he rang the opening bell to celebrate the company’s entry into the exchange, Akfen Holding Chairman Hamdi Akın said the company has been on a “long, steep and difficult path” and added that the company’s administration has a strong belief in the significance of corporate governance and the benefits of the stock market.

Underlining that Akfen has always utilized capital market instruments, Akın expressed his conviction that opening Akfen up to public trade will be a great success for the company.

“Although we seem to have failed to keep some of our promises, we are confident that we will expand the investor base in the shortest possible time. I promise this,” Akın noted, referring to the lower-than-expected demand for stock during the subscription period. He said both the Capital Markets Board (SPK) and the İMKB had offered the company a chance to discard the IPO due to failed expectations; however, the company opted to stay in the game. “Companies in the bourse find their actual value, sooner or later,” Akın added.

Under the symbol AKFEN, the shares were being traded for TL 13 and TL 13.6 apiece. Akfen announced on May 10 that it had lowered the nominal value of shares to be offered to the public from TL 38.8 million to TL 8 million. İstanbul Today’s Zaman