Turkish stocks (XU100) rallied the most in more than two months as the U.S. Federal Reserve and five central banks cut the cost of emergency dollar funding for European banks in an effort to stem the region’s debt crisis.
The benchmark ISE National 100 Index surged 4.7 percent to 54,517.76, the biggest jump since Sept. 20, with 97 of 100 stocks rising and three declining.
Turkiye Garanti Bankasi AS, the country’s largest bank by market value, led gains, advancing 5 percent to 6.26 liras. Tupras Turkiye Petrol Rafinerileri AS (TUPRS), the country’s sole oil refiner, soared 10 percent to 41.60 liras. Akbank TAS (AKBNK), the Turkish bank part-owned by Citigroup Inc., gained 4.9 percent to 6.46 liras and Koc Holding AS (KCHOL), the nation’s biggest group of companies, added 9 percent to 6.32 liras.
The Fed’s move is “a green light to own risk assets” and “Turkish assets benefit immensely,” said Bali Ekin, head of equity trading at Credit Europe Bank NV in Amsterdam. “Short- term risks on the euro zone remain but this is definitely a great relief for the moment.”
Turkey’s benchmark index declined 17 percent this year, while the gauge of Turkish banks (XBANK) slumped 25 percent as the central bank tightened liquidity in an effort to curb lending. Banking stocks make up 38 percent of the overall index, according to data compiled by Bloomberg.
The relief may not last, and the move has likely been “exaggerated” by traders scrambling to cover short positions and close their month-end books on a high note, Ekin said.
“It puts the ‘risk-on’ switch back on but I wonder if the overall picture changed very dramatically,” said Emir Tayman, a trader at Ekspres Invest in Istanbul, an Istanbul-based brokerage owned by Belgium’s Dexia SA. “My bet is on this move fizzling sooner than later.”
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