Turkish lenders had their biggest decline since March 2021 as investors cash in gains from a two-month rally of more than 150%.
(Bloomberg) —
Turkish lenders had their biggest decline since March 2021 as investors cash in gains from a two-month rally of more than 150%.
The Borsa Istanbul Banks Index closed 9.4% lower on Wednesday, extending a tumble on Tuesday prompted by hotter-than-expected US inflation data. The benchmark Borsa Istanbul 100 Index initially fell, then recovered to close up 0.6%.
“The recent rally was so steep that it wouldn’t be normal for it to continue at the same pace without some serious correction,” said Burak Isyar, head of equity research at ICBC Turkey Investment in Istanbul.
Banking stocks had been on a tear since mid-July as domestic investors sought to hedge the value of their savings with inflation now running at more than 80%.
While the vigor of the bank stock rally confounded some traders and analysts, who said it may be overdone, Turkish officials were quick to hail it as a sign of investor confidence in the country.
Turkish Quest to Hedge Inflation Fuels World-Beating Stocks Boom
“Our capital markets have been restoring trust every day and are confident about the future,” Turkey’s Finance Minister Nureddin Nebati tweeted on Sept. 11. “Domestic and foreign investors trust in our companies’ earnings, capital structure and profitability and are investing in them more each day.”
Analysts think the rally may have further to run, even after a plunge that has seen the bank index plummet 16% in two days.
“The climb is likely to continue after this correction as domestic investors don’t have much better options for where to put their money amid high inflation,” Isyar said.
(Updates with trading close.)
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