Supercharged Turkish stocks rally not everything it seems

supercharged turkish stocks rally not everything it seems

Sumary of Supercharged Turkish stocks rally not everything it seems:

  • The stock rally, taking in exporters such as steel producer Iskenderun Demir (Isdemir) and glass maker Sısecam , has seen Istanbul’s $37 billion main bourse soar nearly 20% in November, which is almost as much as the lira has slumped.
  • Emerging economy stock markets often surge when their country runs into trouble because locals see equities as a relatively safe asset as companies either ramp up prices to offset spiraling inflation or benefit from a weaker domestic currency if they export overseas.
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  • Article content Big money international investors are in the opposite situation though.
  • MSCI’s dollar-denominated index of Turkish shares , for example, slumped 9% during Tuesday’s brutal lira rout, by which time it was down 20% this month and 30% since the start of the year.
  • The currency slide – triggered by an unorthodox policy promoted by President Tayyip Erdogan of slashing interest rates, in the hope of boosting the economy and jobs, while inflation hovers near 20% – has at least left Turkish shares historically cheap and for some investors, a useful hedge against losses elsewhere.
  • “The main reason for all-time highs in lira terms is the sharp (lira) depreciation … and … exporting companies’ spectacular stock returns,” said Doruk Ozaner, fund manager at Istanbul Portfoy.
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