Turkish stocks erased early gains on Friday, ending 0.6 percent lower as disappointing euro zone economic data unnerved investors. The change in market mood took the shine off shares in Garanti Bank, which had jumped 1.68 percent to 6.05 lira in early trade after the bank reported on Thursday afternoon that its fourth-quarter net profit surged 151 percent thanks to higher trading income.
Garanti shares closed the day flat. Onur Mutlu at Gedik Invest attributed the market's retreat to concern about the global economy after data showed the euro zone economy grew just 0.1 percent in the fourth quarter and China raised banks' reserve requirements on Friday.
"Fundamentally we are fine, net earnings are coming in well, especially banks are coming in above consensus estimates. The reasons are coming from abroad the Chinese central bank has decided to squeeze liquidity, raising its reserve requirement rate while industrial and GDP figures from the eurozone could be a reason."
The Istanbul Stock Exchange's benchmark index ended the week 0.62 percent lower at 51,063.82 points. About two-thirds of the index is foreign-owned, making it particularly susceptible to global investor mood and risk appetite. Shares of miner Koza Gold dived as much as 9.6 percent on its stock market debut, Turkey's biggest IPO in nearly two years.
Garanti's results followed on the heels of better-than-expected earnings from Akbank, Turkey's second biggest lender, which reported on Wednesday that net profit rose 230 percent in the fourth quarter. Economist Timothy Ash at Royal Bank of Scotland said the banks' results highlighted the relative strength of the Turkish financial system.
"Non-performing loans have risen but at 5 percent they are comparable with those in Central Europe, rather than the 15-35 percent non-performing loans being experienced across the CIS". "Alongside stronger bank supervision and regulation (Turkey's) advantage still is that it is relatively slow in coming to the consumer credit-mortgage boom that descended on the rest of Emerging Europe over the period 2003-2008. Turkish banks were hence less exposed to high risk consumer credit."
Garanti and Isbank have indicated they are considering issuing corporate bonds targeted at foreign investors, one way of lengthening their financing maturity and allowing them to boost mortgage lending, one analyst said. Leading mobile phone operator Turkcell dropped 3.92 percent to 9.80 lira after the telecoms regulator slashed mobile phone call termination fees by half late on Thursday.
"This will affect (Turk Telekom's) Avea positively and Turkcell negatively," Is Invest said in a note. Turk Telekom rose 1.22 percent to 4.98 lira after news from the regulator and after it reported a fourth-quarter net profit that was largely in line with expectations. It also warned however that a mobile phone price war was not yet over.
Avea had introduced highly competitive flat rate call packages but saw high termination fees for connection to other networks hurt its profit margin. The average yield on the November 16, 2011, bond fell to 8.83 percent from the previous day's 8.90 percent. The lira traded at 1.5170 to the dollar, compared with Thursday's interbank market close of 1.5105.
Shares in Ran Lojistik, a Turkish freight company, jumped 6.93 percent to 4.32 lira after it said it would sign a partnership agreement with US-based EMO Trans on air and sea operations. Co-operation would give Ran the opportunity to work in 80 countries, it said in a filing with the stock exchange.
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