IMKB not to end year below 37,500
Posted by meb at February 11th, 2008
The Istanbul Stock Exchange (IMKB) will probably end the year at a 47,000 level, according to the 2008 Strategy Report announced Friday by Ata Invest, Turkish brokerage and financial consulting firm. Turkish markets, which have joined in the United States-derived global recession with its high current account deficit and headscarf-related regime debates, will have a hectic year. However, it is expected that the IMKB, which had a 78.4 percent yield in dollar terms last year, could drop to 37,500 points at most. The dollar value might peak at YTL 1.56 and interest rates might climb to 23 percent.
According to the best-case scenario, IMKB is expected to complete the year at 61,500 points while the dollar is expected to close at YTL 1.25 and interest rates at 15.30 percent. Overseas dynamics have replaced internal dynamics in the markets within the last two years, according to experts. Even in the event of a coup in the country, the markets would not be shaken as long as overseas conditions are good, say experts who shape their investment strategies for 2008 on stocks and YTL instruments.
Foreigners comfortable:
The stock market is very attractive now following a 25 percent drop in the IMKB since the beginning of the year, said Nergis Kasabalı, Ata Invest’s deputy managing director. Among emerging markets, IMKB is the cheapest stock exchange, said Kasabalı, warning that global risks, which will peak in the first quarter, may extend to the second half as well. The interest-rate cuts the Central Bank launched in September 2007 will continue until the end of the year, reaching 3.5-3.75 points, she said. This will benefit the sectors directly related to consumption the most, Kasabalı added. Banking, automotive and durable consumer goods will be the most favorable sectors in 2008, said Kasabalı.
The public offering of Türk Telekom will be a serious test for Turkish markets, she said, adding that the demand for Türk Telekom will be an important indicator. The sale of Halkbank may be an opportunity for foreigners that have not entered the Turkish market yet. However, there may be a delay in these plans to sell if exchange values continue their downward trend, said Kasabalı. Foreigners that invested in stocks in 2007 are very comfortable as they obtained yields of over 70 percent, said Kasabalı. Under the current circumstances, there will not be a panic outflow with loss selling, said Kasabalı, who does not think that direct investment in Turkey will cause things to slow much. The world economy is undergoing a global crisis and it might become chaotic, said Ata Invest Managing Director Bülent Altınel. “However, we do not suppose that major players, the U.S. being the first, will allow the crisis to fall into chaos.
The crisis, which started with the recession of the U.S. economy, is limited to developed countries for the time being. There is a significant impact on developing countries, including Turkey.” The mortgage crisis in the U.S. can also be felt in Europe, affecting firstly the United Kingdom, said Ata Invest Chief Economist Nurhan Toğuç.
This development could create a second wave of crisis, Toğuç warned. Economic growth will be in line with domestic demand, she said. “We expect a positive growth in loan volume thanks to interest-rate cuts by the Central Bank, increasing the economic growth figure to around 5.6 percent.” Current account deficit, the weakest part of the Turkish economy, is expected to be $37 billion in 2007, said Toğuç. Just $27 billion of that amount derives from oil products, she added. “We foresee the current account deficit to stand at $43 billion in 2008. We do not expect a positive development in the current account deficit, for which the determining factor is foreign markets.”
There are risks regarding the private sector’s currency liabilities due to the low exchange rate, Toğuç said. “There will not be problem as long as foreign markets have a positive course. However, should negative developments start, private sector loans may create risks. The same goes for hot money stocks as well.”
Source: Turkish Daily News
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