Shares soar 7.85 pct as Turkish markets enjoy best day in months
ISTANBUL (AP) – Turkish financial markets enjoyed their best day for months yesterday, as shares soared nearly 8 percent on hopes that new loans from the International Monetary Fund will help end a deep economic crisis. Istanbul’s benchmark share index closed the day up by 7.85 percent at 12,263 points, its highest level since May. Nearly $700-million worth of shares changed hands, the highest trading volume since the crisis began in February. With the market in a good mood and with the addition of the falls in interest rates and the dollar (against the lira) we had a very good opening, said Kerim Sarc of ABN Amro in Istanbul. In the morning session alone, shares rose 5.81 percent. The lira was trading at 1,488,000 to the dollar on the central bank-brokered spot market, levels the battered currency has not seen since mid-September. The lira’s depreciation against the dollar since a crisis float in late February is now around 53.8 percent. The action in banks is continuing. The fall in the dollar (against the lira) could have a role there, said Bulent Ercan of Tekfen Securities. While this is becoming a rally, the falls in the dollar (against the lira) and in interest rates are pushing the rise as there is no alternative to the (equities) market, he said. Key interest rates in the form of bond yields on the secondary debt market held steady at 77.24 percent, which traders say is around their lowest possible level without a cut in central bank overnight lending rates. Many investors fund their bond holdings by borrowing on the overnight market. The market is waiting, said one bond dealer for a private bank who asked not to be named. The optimism has sent the dollar under 1,500,000. But rates are in a tight range because of the cost of funding, he said. Yesterday’s gains come after IMF Managing Director Horst Kohler said last week that he would recommend the fund’s executive board approve a new loan package for Turkey next year. Kohler did not say how large the new loan package would be, but other IMF officials said they were looking to close a $10-billion financing gap for 2002. Turkish shares have now gained over 20 percent in the past week on expectations that the new loan package would help end a crisis that has cost an estimated 1 million Turks their jobs. The IMF and the World Bank are already lending Turkey $15.7 billion this year. The government announced a package of spending cuts and tax hikes last week aimed at meeting an IMF-backed target for a primary budget surplus of 6.5 percent of GNP next year.
