Turkish bank refrom law drives shares 3 percent lower
Turkey’s stock market closed three percent lower on Friday, May 11, as uncertainty with regards to the government’s new banking reform law led bank stocks lower. The law is seen as a crucial precondition for Turkey to seal a $10 billion IMF and World Bank rescue package to help overcome the ongoing financial crisis.
The ISE National-100 index fell three percent closing at 11,779.31 points—a total loss of nearly six percent since last Friday. The index, however, is still 64 percent higher than the five-month low hit on March 29 as a result of the severe financial crisis that hard hit the the Turkish stock market.
The biggest drop came from bank stocks, as investors expressed concern over details of the new reform law. Shares in private commercial banks Yapi Kredi Bankasi and Akbank fell 1.89 percent to 5,200 and 2.94 percent to 4,950, respectively.
The devalued lira, which has lost almost 40 percent of its value against the dollar since it was floated in late February, has led to gains in the tourism sector. Although the sector lost 4.27 percent in Friday’s trading, it is forecasted that the tourism industry will experience a boost this summer.
Turkey is also to privatize Turk Telecom in return for additional bank loans. Parliament was due to vote on the banking law on Friday and the Telekom law during the weekend. An IMF meeting is to take place on May 15, expected to formally approve the new lendings.
Brokers foresee positive medium-term expectations, with "a foreign capital influx possible following the IMF's approval of Turkey loans," reported Reuters news agency.
Total trading volume on Friday amounted to merely 452.4 trillion lira ($393.7 million)—down from Thursday's 602.3 trillion. ($1=1149000 Turkish Lira). Of the 299 traded stocks, 212 closed lower—43 registered gains—and the remaining 44 shares remained unchanged. —(MENA Report)
© 2001 Mena Report (www.menareport.com)