Turkish stocks including Akbank TAS (AKBNK), the lender part-owned by Citigroup Inc. (C), fell after Deutsche Bank AG (DBK) became the third major bank in two weeks to say Turkish shares may be overvalued after their rally this year.
The country’s banking index retreated 1.4 percent to 111,850.6 at the close in Istanbul. Akbank slipped 2.4 percent to 6.62 liras, leading declines by index points among banks. The industrial index retreated 1.8 percent to 54,288.33.
The market is currently pricing in an 18 percent expansion in banks’ earnings this year compared with an expected 8 percent based on a “bull case” scenario that foresees the economy expanding at 4.5 percent in 2012, Deutsche Bank said in an e- mailed report today. There is a “huge discrepancy” between earnings growth forecasts for industrials and what the market has priced in, it said.
Deutsche Bank is the latest international bank to raise questions about valuations of Turkish stocks. UniCredit SpA (UCG) downgraded Turkish stocks to “neutral” in its regional portfolio on Feb. 24, saying that “finding marginal investors for Turkish equities after the recent rally might be tricky.” Morgan Stanley (MS) cut Turkish stocks to “underweight” the day before, saying investors should be “locking in profits.”
Turkish stocks have gained 15 percent year-to-date, posting a 22 percent rise in dollar terms, according to data compiled by Bloomberg.
“What we’re seeing now is a correction,” said Sadrettin Bagci, an analyst at Istanbul-based broker Yatirim Finansman Securities. “For banks, the first quarter is not that promising in terms of growth or operating margins.”
Albaraka Turk Katilim Bankasi AS (ALBRK), an Islamic bank, fell 3.1 percent to 1.89 liras. The bank said it won’t pay a dividend from profit last year, after a regulator advised banks in November to retain income as provisions.
Among industrials, Tupras Turkiye Petrol Rafinerileri AS (TUPRS), Turkey’s sole refiner, dropped 4.3 percent to 42 liras. Turk Hava Yollari (THYAO) AO, or Turkish Airlines, plunged 5.9 percent to 2.57 liras and Turkcell Iletisim Hizmetleri AS (TCELL), Turkey’s largest mobile phone operator, lost 1.9 percent to 9.40 liras.
To contact the reporter on this story: Benjamin Harvey in Istanbul at firstname.lastname@example.org
To contact the editor responsible for this story: Gavin Serkin at email@example.com