Global fluctuations hit Turkish markets hard
Posted by meb at March 6th, 2007
The aftershocks of the last week’s serious slump in the Chinese stock exchange continue to reverberate around the world, with Turkish markets especially hard hit in yesterday’s session.
As nervous investors again fled risky assets around the world, the Istanbul Stock Exchange (İMKB) took a beating. After closing at 40,550 points on Friday, stocks opened the day with a loss of 1,278.9 points early in the morning and ended the morning session at 39,271 points. Shares lost 3.15 percent of their value during yesterday’s morning session. The afternoon session began with an increase, eventually closing at 39,729 points, a gain of 1.17 percent. Overall, the İMKB lost 2.02 percent of its value on Monday. On Tuesday and Wednesday of last week alone, the İMKB had lost 5.27 percent of its value.
The Turkish lira depreciated yesterday, reaching lows of 1.4625 to the dollar, but eventually closing at 1.45.
Interest rates rose to 20.40 percent, the highest since Jan.26 of this year.
Experts believe the fluctuations may continue for a while, with the main factor being market developments overseas.
Britain’s benchmark FTSE 100 was down 1.6 percent to 6,018.10 after slipping through the 6,000 mark earlier in the session, while France’s CAC 40 slid 1.7 percent to 5,330.43 and Germany’s DAX dropped 2.1 percent to 6,463.86, subsequent to declines in Tokyo and other Asian markets.
“The fact that the FTSE closed Friday’s session virtually unchanged may have left some thinking that the recent slide in equity markets may be at an end, but triple-digit losses on the Dow ahead of the weekend break have taken their toll on Asian markets,” said Matt Buckland, a trader at CMC Markets.
Also sparking jitters was the yen’s jump to a three-month high against the dollar as investors reversed so-called yen-carry trades. A decline in this trading practice, which involves borrowing money at Japan’s ultra-low interest rates to invest in higher-yielding assets elsewhere, could hurt global liquidity.
In Tokyo, the Nikkei 225 index fell for a fifth day, tumbling 575.68 points, or 3.34 percent, to 16,642.25 points, dragged down by [the stock price falls of] major exporters such as Canon Inc., Sony Corp. and Toyota Motor Corp., whose earnings are being eroded by a stronger yen. Since reaching a nearly seven-year high last Monday, the Nikkei index has slid 8.64 percent.
“I don’t know where the domino effect will stop,” said Jose Vistan, research director at AB Capital Securities in Manila, Philippines, where the benchmark index sank 4.5 percent.
“Everything takes a back seat relative to the sell-off that we are seeing. It’s emotions,” Vistan said. “You throw technicals and fundamentals out the window. Emotions are the ones driving share prices right now.”
Hong Kong’s Hang Seng index tumbled 4 percent to its lowest level since mid-December. Australia’s stock market – which had hit records [record highs??] last month – fell for a fifth day, sinking 2.3 percent. South Korea’s benchmark index dropped 2.7 percent and Indian stocks fell 4.2 percent.
In China, the Shanghai Composite index fell a more modest 1.6 percent, but foreign-currency denominated “B shares” tumbled after officials denied rumors that those stocks might be merged with the mainstream Chinese-currency “A shares.” India’s benchmark stock index closed down 3.8 percent, according to final figures.
Moscow’s RTS stock market lost more than 5 percent of its value by midday Monday, in line with world trends after a cumulative loss of 7 percent last week.
U.S. stocks looked set to sink at the open on Monday as a reduced appetite for riskier assets caused shocks around the world, partly reflecting worries about the global economy.
While the Bank of Japan raised interest rates last month to 0.5 percent, they are still far lower than rates in the United States or Europe, making the yen-carry trade still an attractive strategy, analysts said.
Source: ISTANBUL – TDN with wire dispatches
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