Stock market slides 2 pct
Posted by meb at January 23rd, 2008
Despite the U.S. Federal Reserve’s “shock” interest rate cut of 75 basis points yesterday, Turkish stocks continued to fall for a 10th day.
This has been the longest losing streak experienced by the Istanbul Stock Exchange (IMKB-100) in almost 14 years on concerns that a recession in the United States will slow global economic growth.
Istanbul’s main benchmark index ended the day on 44,593 points. The total loss of the bourse added up to 0.2 percent or 950 points for the entire day, reported the Anatolia news agency.
The IMKB recovered 288.38 points during the second session, after tumbling 1,238.75, or 2.7 percent, to 44,305.33 at midday in Istanbul as all but two stocks fell. The exchange retreated as much as 5.7 percent earlier yesterday, sliding below 43,000. The benchmark entered a bear market Monday, extending its retreat from a record reached Oct. 15 to 22 percent.
“Bloodshed in global markets continues,” Emre Tezmen, head of Tera Brokers in Istanbul, wrote to investors yesterday. “Now that the sell-off has spread to emerging markets, investors have little to hold on to.”
“Around 43,000 levels is a short-term buying opportunity,” Tezmen told Bloomberg in a telephone interview yesterday. “We reached that level and are seeing a reaction now. This won’t be permanent but it’s possible to make some money. We don’t know where the decline will end in Turkey, it’s not Turkey-specific.”
Asian stocks plunged for a second day, sending the region’s benchmark to its biggest drop since April 1990. European markets also extended Monday’s slump.
“The policy makers in the U.S. and in Europe will seek to reverse this slump. They may cut interest rates or inject cash into the market. This can bring about a rebound but it won’t last. We are in a trend and the bearish trend will continue this year. It doesn’t seem easy for a bullish trend to start. The possibility of a recession is strong. It’s not just recession, it’s also hedge funds and banks that are in trouble, the financial sector is in crisis, a very unhealthy landscape,” said Tezmen.
Turkish lira rebounds
The Turkish lira (YTL) rebounded from a three-month low against the dollar after the Federal Reserve cut its benchmark interest rate in its first emergency move since 2001.
The YTL snapped a four-day losing streak, gaining as much as 1 percent to end at 1.2088 per dollar toward the end of the day. The YTL was at 1.2145 by 3:48 p.m. in Istanbul, from 1.2133 Monday. The Fed cut its overnight lending rate to 3.5 percent from 4.25 percent.
Earlier in the day, while the YTL seemed to continue its decline, Bloomberg said it was the worst performer among European, African and Middle East emerging-market currencies.
“It’s a domino effect, with worries about recession in the U.S. now taking their toll on emerging markets,” said Michal Dybula, economist at BNP Paribas SA in Warsaw. “Currencies in countries like Turkey, where economic fundamentals are not stable and the current account deficit may grow, are hurt most.”
The YTL declined as much as 3 percent to 1.2495 per dollar, the lowest level since Oct. 22, and was at 1.2232 by 1:47 p.m. in Istanbul.
source: Turkish Daily News
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