The benchmark index of the İstanbul Stock Exchange (İMKB-100) started the daily trade by jumping directly to a record level of 61,905.08 points, rising 1,297 points, or 2.14 percent, over the close of the last trading day. At the end of morning session, the index stood at 61,831.04 points, rising 2.02 percent. Within the session, the index value hit as high as 62,164.02 points, a level that has never been reached in the history of the İstanbul bourse.
The money market also enjoyed its share of the euphoria as the dollar was being traded for TL 1.48, down from TL 1.515 last Wednesday. Meanwhile, the compounded interest rate of the benchmark Treasury bill dropped to 8.01 percent from 8.08 percent.
he rally was no surprise for market experts, who share the same opinion that the overshooting index value will start to normalize after meeting profit realization sales. They say permanent high levels are only attainable in the middle and long run.
The results of the referendum will be perceived by the markets as a vote of confidence for the government and an indication of the continuation of current economic policies, analysts argue. There will be less political ambiguity in the upcoming days and, thus, the chances are higher that the market will keep with the upward trend.
Selim Işıklar from İnfo Investment points to the possibility of a rise in capital inflows from international markets in the period ahead, as global players will interpret the results to mean the continuation of a single-party government for another term. “The foreign investors in the stock markets welcomed the referendum results on the grounds that the country avoided a new source of political instability. Besides, they weren’t hasty to start sales for profit realizations, as they were monitoring the developments in international markets, he explains.
Foreign interests seem to be well aware of the significance of the approval of the constitutional amendment package, he said, adding that they will be waiting to see the implementation of fiscal policies in the coming months as this could trigger credit rating agencies to upgrade Turkey’s rating.
Ersagun Şimşek from Tera Securities underlines that the market had already bought the possibility of the approval of the amendments in the last couple of weeks, paving the way for record highs. “The outstanding factor for the current situation is Turkey’s interest in change and demand for more democracy. Additionally, foreign investors in the Turkish capital markets believe the referendum renewed confidence in the Justice and Development Party (AK Party) government. The predictions of the results were around 54 percent in favor of “yes” votes, and thus the actual results were beyond expectations,” he asserted.
In the meantime, Tera issued a statement on Monday, sharing their opinion on the situation, which read: “In a nutshell, we think the referendum results strengthened political stability and improved the market outlook. On the other hand, the market will likely interpret the results as an increased prospect of the AK Party winning in the next elections scheduled for July 2011; therefore, expect positive sentiments and buying inclinations to continue in the markets.” Tera’s statement also underlined the effects positive expectations regarding the second quarter gross domestic product (GDP), expected to be announced Tuesday, have had on the steep increase as well. The consensus estimate is 8.5 percent year-on-year growth. The market would react positively to better than estimated GDP figures and vice versa.
Mehmet Ali Yıldırımtürk, an expert on the gold and exchange markets, is also one of the proponents of the idea that the referendum results have led to positive feelings about Turkey, particularly among foreign investors. Further inflows will be the force that pushes the bourse index higher, he noted, emphasizing that the results point to the possibility that 2011 will be a year of economy rather than politics.
Also commenting on exchange rates, Yıldırımtürk said the lira may gain more value in the short run, even though it will not gain a permanent place below TL 1.5 against the dollar.
Speaking to Reuters, economist Timothy Ash at RBS said the confirmation of the amendments by the public would be perceived as a sign of support for modernization and reform as Turkey moves towards European Union accession. “Second, the vote is a huge victory for Turkey’s ruling AK Party, especially given the opposition had attempted to make this a vote of confidence in the government,” he said.
Meanwhile, the chief economist of Ata Invest, Nurhan Toğuç, said in an interview with the Anatolia news agency that the results of the referendum have facilitated the formation of a positive atmosphere with no political risks in the short term. However, unlike Yıldırımtürk, she believes the lira will be traded in the short term around 1.48 and 1.49, and that it may anchor at a much lower level, between 1.4 and 1.45, if signs of a global recovery start to present themselves more strongly.
Source : http://www.todayszaman.com/tz-web/news-221592-106-referendum-victory-pushes-bourse-to-new-records.html - Sept 14, 2010
