ECONOMY

Turkish bourse suffers from Ecevit’s health, bank woes

ISTANBUL – Turkish debt, stocks and the lira extended their early losses yesterday, with brokers fearful that Prime Minister Bulent Ecevit’s illness could lead to early polls and jeopardize reforms needed to meet IMF pact conditions. The reform of the country’s crisis-hit banking sector and talk of bad loans have also dented the confidence of investors on a day when global markets also took a turn for the worse. The busiest April 9, 2003 bonds fell, driving their yield to 72.29 percent from Friday’s 71.41 percent while the lira ended at 1,589,000 to the dollar from Friday’s 1,569,000 on the interbank market. Political instability is at the forefront in crisis-hit Turkey with talk of early polls and a government split over EU reforms rattling markets in recent weeks. Bulent Ecevit, 77, who has been away from his desk due to illness since early May, will undergo a comprehensive medical at an Ankara hospital on Thursday. He said yesterday he was impatient to return to work after that. «Ecevit is planning to return to work and we have seen bad examples of him trying this before and failing. It seems to me he’s overstraining himself again,» said Hakan Avci, strategist at Global Securities. «If he again fails to come back to his office, it’s going to create another negative in the market. He keeps surprising the markets on the downside rather than on the upside,» Avci added. The main stock index fell 2.56 percent to 8,984.58 points prompted by sales in Yapi ve Kredi Bankasi, the country’s fourth-largest bank. Trade in Yapi ve Kredi was halted last Wednesday when the bank watchdog seized two seats on its board and took control of fellow group bank Pamukbank in the latest cleanup of the sector. The bank, an index heavyweight, slumped 21.43 percent to close at 1,925 lira and brought sales in other large banks. «The index couldn’t hold itself up after sales in Yapi ve Kredi brought sales in other banking shares,» said Cengiz Gurbuz of Ekspres Investment in Istanbul. Is Bank fell 6.38 percent to 4,400 lira and Garanti slipped 2.38 percent to 2,050 lira. Turkish markets have been on the slide since last week, with markets worrying that the bank watchdog’s action last Wednesday could spell fresh trouble for Turkey’s banking sector, at the heart of a financial crisis that struck in February 2001. Both Yapi ve Kredi and Pamukbank were controlled by Cukurova Holding. The watchdog action hit the share prices of other group firms last week, including leading mobile phone provider Turkcell. The shares ended flat at 6,400 lira yesterday, well off year-highs of 13,250 lira. Foreign exchange dealers said worries over politics and banks had been partially offset by positive news on Turkey’s EU candidacy and plans to hold reissues of debt today. «The news about Turkey’s EU candidacy was positive and the market liked tomorrow’s debt auction program,» one Istanbul dealer said. European Union leaders said at a summit in Spain at the weekend that they may take new decisions on the candidacy of Turkey, looking to start membership talks with Brussels this year, at a summit in Copenhagen planned for December.