Turkish Stocks Jump to Seven-Month High on ECB Stimulus Wagers

Turkish stocks rose to a seven-month high as investors bet looser monetary policy in the euro area will benefit the country’s assets, while the lira was poised for a fourth month of gains.

The benchmark Borsa Istanbul 100 index gained 1.3 percent to 78,975 at 3:27 p.m. in Istanbul, the highest level since Oct. 30. The index has gained 8.3 percent in dollar terms this month, making it the fifth-best performer among global equity indexes tracked by Bloomberg. Lenders led today’s advance, with the 16-member banking index rising 1.7 percent.

“This is a preparation for European Central Bank easing,” Baris Buyukdemir, a general manager at Ceros Securities in Istanbul, said by phone. “The bet is that European banks, awash with ECB cash, would invest some of that in Turkish assets.”

The ECB’s Governing Council meets on June 5 in Frankfurt to decide on monetary policy, a month after President Mario Draghi said policy makers were “comfortable” with taking action at their next meeting. The bank will cut its main refinancing rate to 0.1 percent from 0.25 percent, according to to the median estimate in a Bloomberg survey of 25 economists.

The Borsa Istanbul 100 may “break through 80,000 points” over the next few days, Buyukdemir said.

The lira gained 0.3 percent to 2.0928 per dollar, 0.9 percent stronger this month.

Before it's here, it's on the Bloomberg Terminal.