Turkish stocks continued their rally Monday as a deep discount to emerging-market peers and an improved outlook from the country’s banks enhanced their appeal to investors with a renewed appetite for riskier assets, Bloomberg reported.
The Borsa İstanbul 100 Index rose as much as 1.9 percent to 120,899.69 on Monday, surpassing the benchmark’s record closing high and adding to their advance after emerging as the surprise winners last week amid the fallout from the Iran-US crisis.
İstanbul stocks are trading at a discount of almost 50 percent to their emerging-market peers. The imminent signing of a partial US-China trade deal is stoking optimism, adding to upbeat sentiment from the ebbing of Middle East tensions. Gains in the local currency and positive news on the economy encouraged the flow of cash to Turkish assets, said İpek Özkardeşkaya, a senior market analyst at Swissquote Bank.
“The stronger Turkish lira and current account data released this morning gave a solid basis for the stock rally, even though the data fell slightly short of the market expectations,” said Özkardeşkaya. “Cheap valuations also give an additional boost to the upside move, making long positions more appetizing for investors as they become convinced that it may be the right time and the right price to enter the market.”
Turkish stocks have climbed 44 percent from the last low touched in May, as 1,200 basis points of central bank rate cuts that spurred the economy and dulled the allure of deposit accounts combined with a relatively stable lira and a revival in risk-on sentiment fueled gains. The main index set its record high in January 2018 after a 48 percent jump during 2017 supported by a flow of loans to companies from the national Credit Guarantee Fund.
The Borsa İstanbul 30 Index, a gauge of local blue-chip stocks, surged 8.4 percent in dollar terms last week, while the benchmark index jumped 8.3 percent, making them the top performers worldwide as upbeat guidance from some of Turkey’s largest banks for 2020 and the relative easing in oil prices highlighted the appeal of stocks in the net importer of crude.