Turkish stocks boosted by better-than-expected earnings

ISTANBUL - Reuters

Turkish shares were boosted on the last day of the week by a string of forecast-beating first quarter results, while bonds continued to be supported by the central bank governor’s hint on April 30 of a rate cut.

Results for several companies, including lender Akbank , insurance company Anadolu Sigorta and real estate company Emlak Konut, beat analysts’ forecasts and lifted the equities market.

Sentiment was also boosted by PMI data announced on May 2 which showed Turkish manufacturing activity rose for the ninth consecutive month in April, though the rate of expansion weakened further to the slowest since last August.

The main share index rose over 2 percent to above 75,300 points by around the noon, outpacing the broad emerging markets index which was up 0.31 percent. Turkish markets were closed on May 1 for a public holiday.

“First quarter results, especially of banks, have supported the positive sentiment while (central bank governor Erdem)Başçı’s comments regarding potential rate cuts have also been equity positive,” said Erkan Dernek, market strategist at Odeabank.

Fixed income markets were supported by Basci dropping hints of a rate cut, causing a bond rally.
The 10-year benchmark bond yield was 9.27 percent on May 2, down from April 30’s close of 9.37 percent.

The lira traded at 2.1098 against the dollar, firming from 2.1160 late on April 30.

Turkish analysts looked ahead to U.S. non-farm payroll data at 1230 GMT which was expected to show that employment rose at its fastest clip in five months in April while the jobless rate was forecast to drop, building on a strong economic momentum.

However, a tone of optimism prevailed.

“With one of the highest interest rates among emerging markets, uncertainty in Russia making Turkey look comparatively better and the central bank’s desire to keep inflation down, the outlook for Turkish assets is positive,” Dernek added.