Bloomberg
Published Jan 10, 2020 10:48
Updated Jan 10, 2020 11:52
(Bloomberg) -- Turkish stocks turned out to be this week’s surprise winners from the Middle East crisis. And there several reasons why Istanbul equities may make the most of their moment in the spotlight to hold on to foreign investors’ attention.
The Borsa Istanbul 100 Index surged 4.5% Thursday, its biggest jump since November 2015 and outperforming more than 90 other global equity benchmarks tracked by Bloomberg, reflecting relief as concerns over an escalation in tensions between the U.S. and Iran dissipated.
Investors may be taking a closer look at some other attractive factors too. A drop off in foreign interest has left the market with a high valuation discount relative to emerging market peers. In addition, Turkey’s status as an oil importer means a post-crisis drop in oil prices may become a positive catalyst. On top of that, some of the country’s largest non-state-owned banks have just announced upbeat guidance for 2020, spurring optimism among money managers this week.
The historically low levels of international ownership compounded Thursday’s rally, spurring sharp gains in the private banking sector, said Julian Rimmer, a trader at Investec Bank Plc in London. The Istanbul benchmark index trades at 6.5 times estimated earnings, compared with a multiple of 13.1 times for the MSCI Emerging Markets Index.
Volumes on the day were driven by the local brokerage unit of Credit Suisse (SIX:CSGN) Group AG and Turkish broker Yatirim Finansman, who were net buyers of 863 million liras ($147 million) of equities in total, according to data compiled by Bloomberg. The two institutions each made more than double the value of trades done by the third most active on the day. While not a global name, Yatirim Finansman is well known in Istanbul circles through its market-moving algorithmic dealings since 2016 that have caused it to be known by local traders as “the Dude.”
Here are some more views from traders and money managers on patterns during Turkish stocks’ “super Thursday,” and what could be next for the country’s equities:
Julian Rimmer, Investec:
Written By: Bloomberg
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