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Turkish stocks fall to 3-year lows on global sell-off

Reuters - Saturday, October 11

By Alexandra Hudson

ISTANBUL, Oct 10 - Turkish stocks on Friday slumped to levels not seen for three years as the credit crisis intensified and panic selling spread while the ailing lira currency fell 4 percent against the dollar to a 19-month low .

Markets globally joined Asia's selling of stocks as fear took hold that policy makers' efforts to contain the financial crisis would not be enough. Trading in some countries was halted to stave excessive losses.

"This is pyschological panic-selling across the board," said Deniz Can Yucel, head of research at Yatirim Invest.

"I don't think investors are considering fundamentals at all anymore. They are just dumping the shares for liquidity," he added.

The lira currency <IYIX=> closed at 1.4330 on Friday from the previous day's closing level of 1.3790. The lira is now 22 percent weaker since the start of the year and has fallen more than 8 percent against the greenback this week alone.

Turkey's main stock exchange index <.XU100> closed down 7.72 percent at 28,495.93 points, and has dived around 17 percent this week as investors fled from emerging markets into safe have investments.

Turkish stocks have now almost halved in value since the start of this year.

"The financial crisis started to hit indebted companies. Further erosion in all asset classes seems to be unavoidable at this point... we expect a huge sell-off," Oyak Securities wrote in a research note.

Lenders Garanti <GARAN.IS> and Is Bank <ISCTR.IS> led the fall as the most heavily traded stocks. Garanti was down 8.4 percent on the day at 2.40 lira, and Is Bank was 10.2 percent lower at 4.58 lira.

Bucking the trend was third most traded stock Turkcell <TCELL.IS>, which saw its stock close 2.13 percent higher at 7.20 lira, correcting a sharp fall on a market close order at the end of the Thursday trading.

So far, measures from the United States, Britain and other countries to fight the worst financial crisis in 80 years -- even this week's coordinated interest rate cuts -- have failed to calm credit and money markets and quell investor fears.

MSCI world equity index <.MIWD00000PUS> fell more than 4 percent at one point to a five-year low, losing a fifth of its value this month alone. The index has lost 43 percent since January, on track for its worst yearly performance in 20 years.

Government bonds in Japan and the euro zone -- usually safer assets which outperform in times of risk aversion -- fell as investors dashed to cash in any assets they have.

Equity trading in Russia, Iceland, Romania, Ukraine and Indonesia has been halted while nearly half the stocks in Milan are suspended, just hours before finance chiefs from Group of Seven rich nations meet in Washington.

"It is hard to compare Turkey to other emerging markets because so many of them are closed," said Yucel.

GLOOM FOR TURKEY

Finance Minister Kemal Unakitan warned the crisis would affect Turkish growth, which some economists project could slow to 3 percent, after annual expansion of around 7 percent over the last five years.

Turkish capacity utilisation fell 3.4 percentage points year-on-year in September, data showed on Friday, pointing at slowing economic activity.

Yet Unakitan insisted Turkey was a safe haven and said the government would consider how to encourage expatriate Turks to invest in the country.

The yield on the benchmark June 23, 2010 bond <0#TRTSYSUM=IS> was at 20.71 percent on Friday, up from the previous day's 20.06 percent.

(Additional reporting by Selcuk Gokoluk and Birsen Altayli; Editing by Ibon Villelabeitia)

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