Turkish markets’ cheer

ISTANBUL (Reuters) – Turkish markets strengthened yesterday after Parliament passed a banking law seen as key in Turkey’s bid to secure a new $12 billion IMF lending pact. The International Monetary Fund said after markets closed it expected its board would meet to discuss the new Turkey loan on February 4 as planned. Yields on benchmark bonds maturing on September 4, 2002 fell to 68.60 percent from 69.78 percent on Wednesday, when they dropped below the key 70-percent level following a Standard & Poor’s upgrade of Turkey’s debt outlook. «Expectations that the banking law will be ratified (by February 4) have brought buyers, particularly to banking shares,» said Erkan Makasci of Park Raymond James. The lira also rose, closing at best bids of 1,309,000 to the dollar from Wednesday’s 1,324,000 and the main Istanbul ISE National-100 stock index ended up 5.69 percent at 13,252.32 points. Parliament approved the law for the second time on Wednesday night, less than a week after it was vetoed by the president. Since it was passed unchanged the president must now ratify it, though he can challenge it in the courts. The banking reforms, deemed by investors as critical to the new IMF loan package, foresee a capital injection of up to $4 billion into crisis-hit banks. Analysts have said court annulment of the three articles the president rejected would not halt the capital flow – a view that appears to be shared by the International Monetary Fund – but brokers said such action could provoke future sales. «If a decision is made by the presidential palace to take the law to the constitutional court it may be reflected with sales on the market,» said Toygar Sungur of Iktisat Investment in Istanbul. Heavyweights in the banking sector pulled the stock market up, with Yapi Kredi gaining 7.79 percent to 4,150 lira, Garanti Bank up 7.27 percent at 2,950 and Akbank up 8.75 percent at 4,350 lira. Economy Minister Kemal Dervis was in New York yesterday for the World Economic Forum and markets were watching for any news from that as well as anticipating January inflation data due to be released on Sunday. Analysts say a reduction in inflation is key to lifting Turkey out of its deepest economic recession since 1945. A low inflation rate could prompt the central bank to cut interest rates, brokers said. Yesterday, the state statistics institute revealed that Turkey’s trade deficit dropped by 65.6 percent to $8.53 billion (9.65 billion euros) in the first 11 months of 2001 compared to the figure for the same period a year earlier.Imports fell by 25.8 percent to $37.15 billion, while exports rose by 13.2 percent to $28.62 billion, the institute said. – On the smaller sizes, sugar cargoes from Cuba continue to appear increasingly in the market, as well as rice cargoes from the East to a number of destinations.

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