Turkey flat as Chinese CB rate cuts fail to ease Asian markets
Posted by meb at December 24th, 2008
This week Turkish markets have remained static despite bad news coming out of the larger markets to Turkey’s east and west.
As Asian markets closed yesterday in minus territory as a result of a number of negative developments in production and consumption figures, markets in Europe have been mixed. Wall Street closed yesterday’s session squarely in the negative as a result of a stream of problematic developments, including a crumbling auto sector and dire retail sales. The İstanbul Stock Exchange (İMKB) closed its first session mildly down at 0.16 percent. During midday trading on Tuesday, the dollar was buying YTL 1.515, and benchmark T-bills were trading at 17 percent.
Explaining the logic behind the flat performance of Turkish markets, despite grisly trading in markets that usually set the trend for Turkey, Murat İğnebekçili, an analyst at EFG Securities, described the “central bank’s surprise rate cut as being the primary element that has neutralized the negative developments” elsewhere. İğnebekçili said other factors weighing in on the performance of Turkish markets, including rising commodity prices, plunging oil prices and expectations of an International Monetary Fund (IMF) standby plan, also play a significant role in dampening these effects.
Asian stock markets fell Tuesday as an interest rate cut in China disappointed investors and a profit warning from Toyota Motor Corp. raised concerns the global slump would only worsen.
There was little cheer before the year-end holidays. Resource firms tumbled along with oil prices and carmakers dropped sharply on news that Toyota expects to post its first annual operating loss in 70 years.
South Korea’s Kospi retreated 35.3 points, or 3 percent, to 1,144.31, Singapore’s benchmark lost 1.2 percent and Australia’s key index fell 0.7 percent. Japan’s market was closed for a national holiday.
In China, Hong Kong’s Hang Seng Index dropped 2.8 percent to 14,220.79 while Shanghai’s main index plummeted 4.6 percent to 1,897.22 as both markets came under pressure after Beijing lowered a key interest rate late Monday.
Investors were unimpressed by a 0.27 percentage point cut on the benchmark one-year lending rate to 2.25 percent, its lowest level since February 2004. Many had expected a half-point cut, analysts said. It was the fifth cut in four months as Beijing rushes to revive economic growth.
After rallying off last month’s lows, Asian markets were succumbing to selling as many investors moved to close out their positions before the end of one of the most tumultuous years in decades.
“There’s a lot of profit-taking before the holiday,” said Ben Kwong Man Bun, the chief operating officer at KGI Securities in Hong Kong. “People believe the upside will be very limited for now. The global economy is facing a huge problem.”
In Europe, stocks traded mostly higher early in the session. Britain’s FTSE 100 and France’s CAC 40 gained about 0.7 percent each, while Germany’s DAX was up by about 0.1 percent.
Asia’s lurch downward came after Wall Street fell overnight. Investors, spooked by the dismal news from Toyota and US drugstore operator Walgreen Co., sent the Dow lower by 59.34 points, or 0.69 percent, to 8,519.77 — its fourth straight daily loss. The broader Standard & Poor’s 500 index fell 16.25, or 1.83 percent, to 871.63.
US stock index futures gained slightly. Dow futures were up 23 points to 8,562, while S&P futures were up 4.7 points, or 0.5 percent, to 876.
Chinese financials were weaker as investors worried the meager rate cut would hurt banks’ balance sheets. Leading lender Industrial & Commercial Bank of China fell 2.6 percent in Hong Kong, and China Life Insurance lost 4.8 percent in Shanghai.
Car companies also saw heavy selling amid worries about demand after Toyota’s bleak outlook. South Korea’s Hyundai Motor Co. plunged 10.9 percent and its affiliate Kia Motors Corp. dived 15 percent. The two companies, which together form world’s fifth-largest automotive group, slashed their joint 2008 sales forecast by 12.5 percent on Monday.
Meanwhile, withering prices for raw materials pulled down resource firms across Asia. In Hong Kong trade, Chinese offshore oil firm CNOOC dropped 6 percent while PetroChina, the nation’s largest oil producer, fell back 5 percent. Australia mining giant BHP Billiton Ltd. declined 3.9 percent in Sydney. Crude oil dipped in Asian trade, with light, sweet crude for February delivery edging down 9 cents to $39.82 a barrel on the New York Mercantile Exchange. Oil prices have fallen 73 percent since July amid fears that massive job layoffs and plummeting consumer spending in the US are weakening global demand.
source: Today’s Zaman
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