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Turkish Earnings Drive Biggest Weekly Stock Loss in 2 Months

Declining corporate earnings and a downgrade to Turkey’s credit outlook by Standard & Poor’s drove Turkish stocks to their worst week in almost two months.

The benchmark ISE National 100 Index fell 2.6 percent in the week to 59,015.69 at the close in Istanbul, its biggest 5- day loss since March 9. Small and medium-sized companies led losses, with fertilizer maker Ege Gubre Sanayii (EGGUB) dropping 16 percent, tire producer Goodyear Lastikleri Turk AS (GOODY) slumping 10 percent and clothing retailer Boyner Buyuk Magazacilik AS (BOYNR) sinking 9.6 percent.

“Mid- and small-caps suffer from the slowdown of the economy most,” Istanbul-based Tera Brokers said in an e-mailed report to clients today. Earnings at Turkish companies with market values of below $3 billion have contracted by 10 percent this year, according to a tally of results reported so far, Tera said.

The government predicts economic growth will slow to 4 percent this year from 8.5 percent last year as it tackles record growth in lending and attempts to reduce the world’s second-biggest current account deficit.

S&P downgraded Turkey’s long-term foreign and local currency ratings outlook to stable from positive May 1, citing less-buoyant external demand and deteriorating terms of trade. The drop this week pares the ISE National 100 index (XU100)’s rise this year to 15 percent, following a 22 percent retreat in 2011. Of all the companies in the gauge, 31 have reported first quarter results.

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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