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TURKEY: IMF STORY HAS KEPT MARKETS ALIVE IN 2009
The index has gained more than 96 percent in 2009, the sixth biggest among 91 global benchmarks tracked by Bloomberg, and outperforming the 73 percent advance of the MSCI Emerging Markets Index.
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: 01.01.2010 |
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Prime Minister Recep Tayyip Erdoğan says the government is close to signing a loan agreement with the IMF, according to press reports. Turkey’s main stock index almost doubled in 2009, heading for its biggest annual gain since 1999, led by banks as the deepest interest-rate cuts among Group of 20 nations boosted their earnings.
Istanbul Stock Exchange’s benchmark ISE-100 index was near 53,000 points mid afternoon on the last day of 2009, having advanced more than 1,250 points, on news that a deal with the International Monetary Fund is close.
The index has gained more than 96 percent in 2009, the sixth biggest among 91 global benchmarks tracked by Bloomberg, and outperforming the 73 percent advance of the MSCI Emerging Markets Index.
The Turkish Central Bank cut rates for 13 straight months before ending the sequence in December, helping to reduce the year-on-year contraction of the economy to 3.3 percent in the third quarter from a record 14.7 percent in the first.
Prime Minister Recep Tayyip Erdoğan on Wednesday night said the government was close to signing a loan agreement with the IMF, according to press reports. The IMF has agreed to Turkey’s conditions for a two-year loan accord, which may be signed in January, Erdoğan said at the Ankara meeting, according to two party officials, who declined to be identified.
“By stating that the IMF accepted all conditions put forward by Turkey, Erdoğan is most probably trying to sell the IMF deal idea first to his fellow party members,” said Yarkın Cebeci, an economist at JPMorgan Chase in Istanbul, in an e-mail notice. “The market impact will be significant” as few investors expected an IMF accord.
Bond yields fall
Turkish bond yields fell the most since 2004, dropping 79 basis points to 8.65 percent, according to an ABN Amro benchmark index. Bonds were also boosted by a report in Referans newspaper that the government will cut a tax on profits earned by local bond investors to 3 percent or less, from 10 percent.
The arrival of IMF loans would reduce the amount of money that the Treasury needs to borrow from local markets to finance deficits, said Tevfik Aksoy, an economist at Morgan Stanley in London, in an e-mailed report. That would free up Turkey’s banks, the main buyers of local debt, to lend more money to companies and consumers instead, he said.
The government has been talking with the IMF since a previous $10 billion loan program expired in May 2008. An agreement would help reduce concern over government borrowing and aid recovery from Turkey’s deepest economic recession on record.
“The main reason for Turkish index performance is that the banking sector recorded very high profits in 2009, because rate cuts boosted the value of their bond portfolios,” said Orhan Canlı, a trader at İş Investment. “The IMF story also kept the markets alive.”
SOURCE: HURRIYETDAILYNEWS.COM
December 31, 2009
Istanbul Stock Exchange’s benchmark ISE-100 index was near 53,000 points mid afternoon on the last day of 2009, having advanced more than 1,250 points, on news that a deal with the International Monetary Fund is close.
The index has gained more than 96 percent in 2009, the sixth biggest among 91 global benchmarks tracked by Bloomberg, and outperforming the 73 percent advance of the MSCI Emerging Markets Index.
The Turkish Central Bank cut rates for 13 straight months before ending the sequence in December, helping to reduce the year-on-year contraction of the economy to 3.3 percent in the third quarter from a record 14.7 percent in the first.
Prime Minister Recep Tayyip Erdoğan on Wednesday night said the government was close to signing a loan agreement with the IMF, according to press reports. The IMF has agreed to Turkey’s conditions for a two-year loan accord, which may be signed in January, Erdoğan said at the Ankara meeting, according to two party officials, who declined to be identified.
“By stating that the IMF accepted all conditions put forward by Turkey, Erdoğan is most probably trying to sell the IMF deal idea first to his fellow party members,” said Yarkın Cebeci, an economist at JPMorgan Chase in Istanbul, in an e-mail notice. “The market impact will be significant” as few investors expected an IMF accord.
Bond yields fall
Turkish bond yields fell the most since 2004, dropping 79 basis points to 8.65 percent, according to an ABN Amro benchmark index. Bonds were also boosted by a report in Referans newspaper that the government will cut a tax on profits earned by local bond investors to 3 percent or less, from 10 percent.
The arrival of IMF loans would reduce the amount of money that the Treasury needs to borrow from local markets to finance deficits, said Tevfik Aksoy, an economist at Morgan Stanley in London, in an e-mailed report. That would free up Turkey’s banks, the main buyers of local debt, to lend more money to companies and consumers instead, he said.
The government has been talking with the IMF since a previous $10 billion loan program expired in May 2008. An agreement would help reduce concern over government borrowing and aid recovery from Turkey’s deepest economic recession on record.
“The main reason for Turkish index performance is that the banking sector recorded very high profits in 2009, because rate cuts boosted the value of their bond portfolios,” said Orhan Canlı, a trader at İş Investment. “The IMF story also kept the markets alive.”
SOURCE: HURRIYETDAILYNEWS.COM
December 31, 2009
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