Turk markets hurt by AKP closure case

ISTANBUL (Reuters) – A court’s decision to examine a case calling for the closure of Turkey’s ruling Justice and Development Party (AKP) pushed down the country’s stocks and the lira currency yesterday with weak global markets compounding the losses. The high-yielding lira fell as much as 2.2 percent from Friday’s close to 1.3240 against the dollar yesterday. At 1352 GMT the lira stood at 1.3220 to the dollar, having closed on the interbank market on Monday at 1.3070. It closed on Friday at 1.2945. «New York opened and they started buying dollars like crazy for their clients, most likely stop-loss buying,» said Ahmet Turan, head of foreign exchange at Fortis Bank. «Not today but we could see 1.35 in the next couple of days.» The lira saw sharp falls earlier in the day after Turkey’s Constitutional Court agreed to hear a case to shut down the ruling party for Islamist activity and bar the prime minister from office, heralding a period of prolonged uncertainty in the EU candidate state. The pro-business, religiously oriented AKP denies charges that it has an Islamist agenda and says the prosecutor’s indictment is politically motivated. Istanbul’s main stock index extended losses after the court’s announcement, weakening as much as 3.4 percent to its lowest level this year. Shares later trimmed their losses to close down 1.23 percent at 39,015.44 points in Istanbul, but still underperformed emerging stocks overall, which fell 0.86 percent. «Since Friday the market has been pricing in the opening of the case… The global markets are bad and this makes things even worse. We will continue to underperform our market peers,» said Ayse Colak of Tera Stockbrokers. Analysts attributed the slight recovery to overselling by investors ahead of the court announcement and saw it as a short-lived correction. The next support for the share index was at 36,000 points, said Colak. The yield on the October 7, 2009 benchmark bond rose to 18.60 percent from 18.44 percent. Slower-than-expected fourth-quarter GDP growth data also hit market sentiment, as full-year GDP growth came in below the government’s target, at 4.5 percent. Growth in 2007 was the lowest annual rate since a financial crisis in 2001. «The market sentiment is weak and the GDP data did not help sentiment,» said Ekspres Investment chief economist Guldem Atabay.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.