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BlackRock to Third Point Blindsided as Turkey Shares Plummet

A Halkbank Branch Stands in Istanbul
Turkiye Halk Bankasi AS declined 14 percent since its chief executive officer was detained yesterday as part of the probe, a day after a regulatory filing showed BlackRock bought 3.9 million shares. Photographer: Kerem Uzel/Bloomberg

BlackRock Inc., the world’s biggest money manager, and billionaire Dan Loeb’s Third Point LLC. are among investors hurt by slumping Turkey stocks as a corruption probe into businessmen and politicians prompted declines.

Turkiye Halk Bankasi AS dropped 13 percent since its chief executive officer was detained yesterday as part of the probe, a day after a regulatory filing showed BlackRock bought 3.9 million shares. Emlak Konut Gayrimenkul Yatirim Ortakligi AS, Turkey’s biggest real-estate developer, posted a 12 percent two-day drop after Third Point invested $150 million last month.

Suleyman Aslan, the CEO of Halkbank, and Murat Kurum, his counterpart at Emlak Konut, were among dozens taken into custody during a probe into gold smuggling, money laundering and bribery in government tenders, state-run Anatolia news agency reported. The lira slumped and stocks dropped the most in the world after the executives were detained yesterday with the sons of three cabinet ministers by a unit of Istanbul’s police.

“Investors were blindsided by the developments yesterday morning,” Julian Rimmer, a trader at CF Global Trading UK Ltd. in London, said today in emailed comments. “Halkbank has long been considered among investors the best bank in Turkey owing to its higher return on equity.”

Halkbank said in a filing to the Istanbul bourse yesterday that documents and information had been requested in relation to the probe, without disclosing further details. Emlak Konut said its CEO was called in to give information late yesterday.

Buy Ratings

Halkbank is rated a buy by 26 of 29 analysts, according to data compiled by Bloomberg. The shares have lost 21 percent this year, compared with a 8.7 percent decline on the Borsa Istanbul National 100 index.

“The best-held bank on the Istanbul Stock Exchange falling 15 percent in 24 hours with just two weeks of the year remaining is an unmitigated disaster for many portfolio managers and now they have a dilemma,” CF Global’s Rimmer said.

Halkbank fell 0.7 percent to 13.75 liras at the close in Istanbul, after earlier dropping as much as 6.1 percent. Emlak Konut was unchanged at 2.32 liras, compared with the 2.50 liras that Third Point paid in last month’s secondary public offering.

Halkbank was favored by some investors because it is better able than some rivals to withstand both an increase in interest rates and regulatory changes intended to rein in consumer lending, Cetin Dogan, an analyst at BCG Partners Inc., said in e-mailed comments from Istanbul.

Power Struggle

The raids may suggest an escalation in a power struggle between Prime Minister Recep Tayyip Erdogan and followers of U.S.-based Islamic cleric Fethullah Gulen, who are influential in the judiciary and police force. News of the detentions led to the biggest market declines in Turkey since June, when anti-government protests roiled the nation.

Melissa Garville, a spokeswoman for BlackRock in New York, declined to comment on Turkey yesterday as did Elissa Doyle of Third Point in an e-mail from London. No one at Halkbank was immediately available to comment.

BlackRock’s purchases reported on Dec. 16 brought its holding in the Istanbul-based bank to 26 million shares, or a 2.1 percent stake. The asset manager is the second-largest shareholder after the Turkish state. BlackRock also increased its stake in Emlak Konut to 1.4 percent by buying about 500,000 shares, according to a regulatory filing on Dec. 16, making it the biggest owner after Turkish state housing authority TOKI.

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