Turkish stocks plunges to 3-year lows due to risk aversion
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Turkish stocks plunged to their lowest levels in more than three years on Tuesday and the lira currency continued to fall against the U.S. dollar, as the prospects of a deep global recession intensified, battering markets worldwide. (UPDATED)
The benchmark Istanbul Stock Exchange index closed 2.29 percent down on Tuesday, after falling 3.2 percent in morning trade at 23,279 points, the lowest level since early 2005. The index also lost 5.42 percent on Monday.
Stocks traded in-line however with the MSCI emerging stocks index, which weakened 3.3 percent.
"Nothing seems to stop the bearish outlook in the near term," Deniz Can Yucel, head of equity research at Yatirim Finansman Securities told Reuters.
"The delay of the agreement with the IMF and downgrades by S&P for Turkish banks after the country's outlook was downgraded have put further pressure on the market," he said, adding hedge fund redemptions were also playing a big role in the sell-off.
S&P revised Turkey's credit outlook to negative from stable in the last week, saying the downside risks are more significant.
The lira slid to 1.6550 against the dollar on the interbank market from Monday's close of 1.6330.
Turkish stocks have now lost 57 percent of their value since the start of 2008 -- and third quarter earnings from Turkish companies have provided little comfort. The lira has lost approximately a third of its value against the dollar this year, and is now trading at levels from early 2006.
The yield on the benchmark June 23, 2010 bond rose to 22.60 from 22.08 percent on Monday.