Crisis sweeps $90 bln from Turkish equities
Posted by meb at March 26th, 2008
As the benchmark IMKB-100 index of the Istanbul Stock Exchange has witnessed a 28.4 decline since the beginning of the year, largely due to the U.S.-based credit crunch, the stock value of local companies seems to have been swept away.
Adding to that the impact of the rise in exchange rates, the market value of Turkish companies trading in the stock exchange deteriorated by $90 billion down to $200 billion as of March 21, compared to $289.98 billion at the end of 2007.
The value of publicly held stocks at the IMKB, which has an average free float of 30 percent, declined by $27 billion down to $60 billion. The value of stocks owned by main partners of the companies dropped by $63 billion down to $140 billion. Meanwhile, the value of the stocks owned by foreigners, which have approximately 72 percent share out of the publicly held portion, declined by $19.4 billion and dipped at $43.2 billion.
Risk on rise:
The credit crunch which has until now caused writedowns of more than $285 billion for global financial giants is expected to continue for a while despite precautions taken by the U.S. Federal Reserve and an aggressive interest rate cut policy in the United States.
But in Turkey, a perceived increase of domestic political risks adds to the mix. The risks that were ignored for the last four years are haunting the markets today, since the Justice and Development Party (AKP) government did not take the necessary steps concerning structural reforms.
The uncertainty of relations with the International Monetary Fund (IMF) after May, the inertia concerning membership to the European Union are raising criticism against the government. Also, a high current account deficit, deviation from the inflation target – still at 4 percent despite indications that it might well exceed 10 percent – unemployment and a relative shrinkage of foreign capital inflow become other reasons for a bear market.
Foreigners’ attitude determining:
The scale and duration of the crisis in the overseas markets is expected to determine the domestic market. Foreigners, which hold 72 percent of the stock market, sold stocks worth $772 million in the first two months of the year. If global markets start to rally and domestic political risks diminish, the IMKB is expected to rank among top bourses again.
While source costs are expected to increase as a result of a global liquidity shrinkage, the banks, the shares of which gained value rapidly in the last four years, may put on brake in terms of profit increases this year.
The IMKB-100 index saw a loss of 28.4 percent while banking index declined 35 percent this year. Industrial index, services index and financial index lost value by 18.2 percent, 14.7 percent and 34 percent respectively during the period.
IMKB-30 heavily hit:
The IMKB-30 Index, which features Turkey’s giant companies, witnessed a decline of 30 percent this year. In line with the drop of the index, the market value of the IMKB-30 companies decreased by $64.2 billion – down to $120.84 billion from $185.76 billion. The value of Akbank, which operates under the umbrella of Sabancı Holding, declined by 35.4 percent to $14.4 billion, while the value of Garanti Bank was down by 45.6 percent to $18.9 billion. The values of İşbank, Vakıfbank, Yapı Kredi Bank and Şekerbank declined by 33.1 percent, 42.1 percent, 38.6 percent and 49.5 percent respectively.
Among IMKB-30 companies, fuel distribution and lubricant company Petrol Ofisi was the company to bear the lowest losses. The market value of the company declined by 10.9 percent to $2.2 billion. Iron and steel producer Erdemir suffered a loss by 17.7 percent while market chain Migros lost 19.8 percent. Tüpraş, the Turkish Petroleum Refineries Corporation, is down 24.1 percent and GSM operator Turkcell 23.9 percent.
Source: Referans via Turkish Daily News
Related posts: