Bloomberg News

Turkish Stocks Gain 3rd Day on Bets of Bank Restriction Rollback

September 28, 2011

Sept. 28 (Bloomberg) -- Turkish stocks rose a third day, led by banks, as investors bet the central bank would begin reversing measures that restrained lending and limited profits.

Istanbul’s benchmark ISE National 100 Index, in which financial companies have a 54 percent weighting, rose 594.32, or 1 percent, to 58,855.59 at 12:09 p.m. in Istanbul. The index of Turkish banks surged as much as 2.3 percent.

“Though many think Turkey’s not an island, given the global backdrop, we are the next best thing to an island,” Mine Yoruk, a trader at Erste Bank in Istanbul, said in response to e-mailed questions. “Banks happen to be the best asset to buy off this island.”

The Turkish central bank reiterated its commitment to record low interest rates to boost the economy yesterday, saying it may need loosen all policy instruments. That suggests the bank may cut bank reserve requirements, making lending relatively less expensive, before its next scheduled meeting on Oct. 20, Yoruk said.

“Economic factors affecting the banking sector on the negative side are changing for the better,” Yoruk said by e- mail. “Reserve rate cuts are the talk of the town.”

Turkiye Garanti Bankasi AS, the country’s largest lender by market value, gained 2 percent to 7.20 liras. Akbank TAS, the bank co-owned by Haci Omer Sabanci Holding AS and Citigroup Inc., climbed 2.3 percent to 7.04 liras. Yapi & Kredi Bankasi AS, owned by UniCredit SpA and Koc Holding AS, advanced 2.1 percent to 3.86 liras.

“Relatively speaking Turkey is still in a better situation than most,” said Tunc Ural, a director of trading for HSBC Holdings Plc in Istanbul.

Policy makers began raising reserve requirements in December to limit lending as Turkey’s current-account deficit surged to record levels. It has since indicated that the measures could be relaxed as Europe’s debt crisis makes maintaining domestic growth a priority.

Turkish equities have gained 9.1 percent so far this month, compared to a 12 percent drop on the MSCI Emerging Markets Index.

--Editors: Linda Shen, Peter Branton

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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