Jul 11 2018

Foreigners sell Garanti as Turkish stocks offloaded in record volume

Investors in Turkey sold hundreds of millions of dollars of shares in Garanti Bank as trading volume in the main Istanbul index reached a record high amid a general sell-off.

Garanti shares saw 2.59 billion liras of total net sales, pushing the share down 8.2 percent by the close of trading on Monday, according to data compiled by news website Haberturk. Shares of Turkish Airlines followed with 2.1 billion liras of sales.

Foreign investors in Turkey’s stocks, bonds and the lira have been spooked this week by President Recep Tayyip Erdogan’s appointment of his son-in-law, Berat Albayrak, to head the Treasury and Finance Ministry. Some analysts see the move as further evidence of Erdogan’s attempts to get a tighter grip on economic and monetary policy, fulfilling a pledge he made prior to his re-election on June 24.

Trade in the BIST-100 index of shares on Monday totalled 11.6 billion liras, a record, as it fell 3 percent to 96,274.

The biggest sellers of Turkish stocks among brokers were Merrill Lynch with 763.7 billion liras, followed by local firm Yatirim Finansman with 205.1 million liras, Haberturk said.

Prior to the presidential vote, Erdogan had promised to lower interest rates and boost economic growth and employment ahead of local elections due in March. His pledge, made in May and repeated in the week before the poll, had fuelled a decline in the lira, which reached a record low of 4.92 per dollar in May. The central bank has since been forced to raise interest rates by 425 basis points to 17.75 percent to stabilise the currency and tackle inflation, which has reached 15.4 percent.

The decline in Turkish stocks continued on Tuesday, with the index falling 1.6 percent to 94,767 at 11:02 a.m. in Istanbul. Garanti fell 4.6 percent to 7.51 liras, the lowest level since January last year.