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March 29, 2019 www.intellinews.com I Page 2
Erdogan vs global finance: move against shorting lira sparks biggest Turkish stock market fall in nearly three years
the Istanbul stock exchange’s biggest one-day fall since the days after the attempted coup in mid-2016.
Meanwhile, Turkey’s dollar-denominated sovereign bonds tumbled on March 27 and the cost of insuring exposure to its debt soared to
a 6-1/2 month high. Many dollar bond issues plumbed multi-month lows with the 2030 bond falling 2.9 cents in the dollar to trade at 126.75 cents – the lowest level since October 2018, according to data from Tradeweb cited by Reuters. Turkey’s 5-year credit default swaps (CDS) soared to 441 basis points, up 25 bp from March 26’s close, having now jumped by more than 100 bps over the past week, data from IHS Markit showed.
Evaporation of liquidity
Investors were liquidating stocks to get their hands on lira, after Erdogan administration officials essentially brought in moves to arrest a steep decline in the currency by shutting down short- term liquidity. The evaporation of that liquidity made it impossible for most traders to short the lira (borrow it, sell it, then buy it back cheaper) because the offshore overnight swap rate rose to scarcely believable heights – by 16:45 local time, Reuters was reporting that it stood at 1,200%.
Erdogan’s problem is essentially a ‘have cake and eat it’ dilemma. On the one hand his administra- tion persists with an unbalanced economy that
is dangerously reliant on short-term flows of hot capital, while on the other – especially in weeks
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,207
2%
13%
MOEX
2,492
0%
5%
MSCI EM
1,045
-1%
9%
S&P
2,815
1%
13%
NASDAQ
7,669
2%
16%
DAX
11,428
-1%
8%
FTSE
7,234
2%
7%
Commodities
Price, $
1M YTD
Brent
68.0
3%
26%
WTI
59.3
4%
31%
Urals
74.2
-4%
65%
Gold
1,290
-2%
1%
Silver
15.0
-4%
-3%
Nickel
12,775
-2%
21%
Copper
6,385
-2%
7%
Aluminum
1,896
0%
1%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
72.93
-3%
-8%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms M&M RTS MOEX
8
13
10
17 14
12.9
10
5.1
0 5 10 15 20 25
Source: MOEX, BCS GM
source: MOEX, BCS GM
Sectors: % return YTD