Turkish stocks closed lower on Friday hit by sales of bank stocks after the publishing of earnings by some sector players, and booking profits on three consecutive days of gains. The main stock exchange index fell 1.43 percent to 59,866.75 points, but is still up by around 9 percent this month. The MSCI global equities index dropped 0.85 percent.
Banking stocks fell 2.56 percent, with state-run Halkbank down 3.17 percent after it posted a forecast-beating second-quarter net profit of 519.8 million lira ($344.2 million) on Thursday. "(Investors) are especially selling bank stocks and pulling down the index. The index may fall to 59,000-59,500 levels," said a fund manager with one Turkish institution.
Analysts, however, said the market remains on a positive trend and has largely ignored escalating political tensions ahead of a September 12 referendum on a constitutional reform package. The benchmark April 25, 2012 benchmark bond climbed to 8.32 percent from the previous day's 8.25 percent.
Foreign bank reports suggested betting on rising yields and players said Thursday's central bank move to raise reserve requirements for foreign exchange deposits by 0.5 percentage points also lifted bond yields. "The benchmark April 25 2012 bond had fallen as low as 8.15 percent after starting trading 8.50 percent. Now it is back to 8.30 percent and this can be seen as booking profits," said the same fund manager.
Citi economists said in a note that the central bank's move hints that the bank was becoming increasingly uncomfortable about the appreciation of the lira and the rapid widening of the trade deficit, which perked up 95 percent in the first half. Official data showed on Thursday that trade deficit moved 35 percent up in June to $5.62 billion.
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