Turkish assets rebounded on Friday after investors shrugged off concerns about political tension and deadlock over the selection of two key military leaders, but Akbank's poor earnings crimped share gains. Akbank, Turkey's largest bank by market value which is 20 percent-owned by Citigroup, managed only a 4 percent rise in second-quarter net profit, after the higher rates it paid to lure depositors hit net interest income.
Its shares fell 1.26 percent while the main stock exchange index rose 0.25 percent to 59,753, recovering a 0.5 percent dip on Thursday. Turkish stocks hit successive all-time highs last week, which have made them vulnerable to profit taking, particularly given their 13 percent rise since the start of the year, in contrast to a rise of just 2 percent for the MSCI emerging markets index.
The yield on the April 25, 2012, benchmark bond eased to 8.40 percent from 8.43 percent the previous day, while the lira firmed to 1.4955 from a close of 1.5010. "Political tension affected markets yesterday, but now that things don't seem to be advancing, people stopped worrying about this. The military-government tensions are not a focal point and global data is giving support," said economist Ozlem Bayraktar at Unicorn Capital. A recent string of bullish German economic data bodes well for Turkish trade, analysts say.
Investors had been rattled by the prospect of renewed rifts between the powerful military and the dominant AK Party after military and government leaders who took part in a four-day Supreme Military Council meeting failed to agree on a new chief of staff or head of ground forces. Relations were already strained following the decision to issue arrest warrants against 11 officers in late July over their alleged role in a plot to overthrow the government.