Turkish Stocks Post World’s Biggest Rally This Month

Turkish stocks extended the world’s biggest rally this month on bets tumbling oil will help narrow the country’s trade deficit and as banks priced at a discount to emerging-market peers lured investors.

The Borsa Istanbul 100 Index rose 0.9 percent, extending October’s gain to 7.5 percent. Akbank TAS, the nation’s second-biggest bank by market value, advanced 1.9 percent while Turkiye Garanti Bankasi AS, the largest listed lender, added 0.8 percent.

Brent crude has tumbled more than 25 percent from its peak in June amid a slowdown in demand growth and expansion of output. Turkey, which depends on oil imports for most of its energy needs, has the biggest balance-of-payments shortfall relative to economic output among developing nations. The price-to-book ratio for the Borsa Istanbul Banking Index this month fell to a seven-month low of 1.10, compared with a low of 1.23 for the MSCI Emerging Market Financial Index.

“Lower crude oil prices have a significant positive impact both on Turkey current account deficit and inflation,” Vedat Mizrahi, head of research at Istanbul-based Unlu Menkul Degerler AS said by e-mail. “The valuations looked quite attractive, especially the bank valuations, in the emerging market context a few weeks ago before the rally started.”

The yield on the benchmark two-year government bond fell 10 basis points to 8.56 percent, the lowest since July 31. The lira weakened 0.9 percent to 2.2181 per dollar at 5:40 p.m in Istanbul.

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