Turkish stocks rallied the most in the world as bank valuations near a five-year low attracted investors betting a decline last month was overdone.
The Borsa Istanbul 100 Index rose 3.1 percent to 68,021.99 at the close, the biggest advance among 94 global equity indexes tracked by Bloomberg. Turkiye Garanti Bankasi AS (GARAN), the nation’s biggest lender by market value, climbed 5.2 percent to a one-week high after tumbling 8.7 percent in December. Akbank TAS (AKBNK), the lender part-owned by Citigroup Inc., and state-run Turkiye Halk Bankasi AS (HALKB) each gained more than 5.4 percent.
Turkey’s stocks, bonds and currency fell last month after police arrested dozens of suspects on Dec. 17, including Halkbank’s chief executive officer, as part of a corruption probe. Prime Minister Recep Tayyip Erdogan retaliated by dismissing and reassigning hundreds of police officials. The crisis sparked a 12 percent drop in the Borsa Istanbul National Banks Index in December, leaving the gauge valued at 1.05 times net assets, or book value, on Dec. 27, the lowest since 2009.
“This looks like foreign investors are buying, as they gaze at cheap valuations,” Figen Ozavci, deputy chief executive officer at Meksa Yatirim in Istanbul, said by phone. “Banks, especially Halkbank, were today’s locomotives.”
Lenders in Turkey’s 16-member banks gauge trade at an average 1.12 times book value, compared with a multiple of 1.3 for the MSCI Emerging Markets/Financials Index. The Borsa Istanbul 100 Index (XU100)’s 14-day relative strength index fell to 27 in the last week of December, below the 30 level that indicates to some technical analysts a security is poised for a rebound. The measure rose to 44 today.
“The stock market looks oversold,” Julian Rimmer, a trader at London-based CF Global Trading U.K. Ltd., said by e-mail. “But the volatility will deter institutional investors from committing fresh capital to the market.”
The lira appreciated 0.1 percent to 2.1770 per dollar at 6:19 p.m. in Istanbul, after earlier weakening as much as 0.7 percent. The currency tumbled 6 percent in December. The yield on Turkey’s two-year benchmark bonds rose eight basis points, or 0.08 percentage point, to 10.25 percent today, the highest level since January 2012.
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