Page 14 - bneMag bne_December 2020_20201201

14 I Companies & Markets bne December 2020
bne:Funds
Fridman rides an ‘Istanbull’ with Turkcell sale, wise locals hold on to their gold
Akin Nazli in Belgrade
Russian tycoon Mikhail Fridman on November 9 grabbed the opportunity presented by a short-lived spike in the Turkish lira (TRY) and the latest ‘vaccine rally’ on global markets to benefit from the sale of a 5% stake in Turkey’s largest mobile operator Turkcell (TCELL), Bloomberg reported on November 10.
“Mkts, of course, are not interested in the nuance of an announcement [on a potential coronavirus vaccine] like yesterday's and immediately front-loaded all the good news because the system is still flooded with all that central bank liquidity sloshing round. It's not just boats that are holed below the waterline which floated yesterday but even those languishing on the seabed like Turkey. [The Borsa Istanbul] and the [USD/TRY rate] both rallied about 5% yesterday
on what I can only describe as faith of Islamic dimensions that all would be well after the cabinet reshuffle enforced on Weirdogan [Turkish President Recep Tayyip Erdogan] by the resignation of his son-in-law [Turkish finance minister Berat Albayrak],” Julian Rimmer of Investec wrote on November 10 in a note to investors.
Fridman raised around $205mn in an accelerated share-sale led by Credit Suisse and Goldman Sachs as book-runners.
The identity of the buyers was of course shrouded due to the financial industry’s love of confidentiality, but it seems they were foreign investors.
“This was a well-timed transaction,” Nick Koemtzopoulos of Credit Suisse told Bloomberg.
The deal was the largest non-banking-related share sale seen in Turkey since the initial public offering (IPO) of retailer Sok in mid-2018, he added.
The sale by Fridman’s Imtis created a likely scenario of “overhang” in Turkcell’s shares, given that more stock could be sold, Ivan Kim of Xtellus Capital told the news agency.
“[Fridman’s] remaining [19.8%] stake is for sale as well,” he said, although it presently remains subject to a 12-month lock-up period.
Meanwhile, Turkcell’s main shareholder, essentially the president, Erdogan, on November 10 was again talking up
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the beleaguered Turkish economy, while Turkish assets were being handed out to muscular bulls amid the country’s “perfect storm”.
Sundry narratives on Turkey bulls
Market participants were naturally attempting to distinguish who the buyers were in November 9’s Turkish rally.
“Retail punters were swept up in the frenzy this afternoon but I doubt intls would be participating,” Rimmer wrote in his note.
It is almost certain by now that these “retail accounts” are not actually so retail as they are single-handedly coordinated. So, if Rimmer has it right, we can assume that the government has once again ridden a Borsa Istanbul rally.
Meanwhile, Is Invest’s daily share bulletin looking at foreign investor-held stocks showed that foreign-holdings on the Borsa
“Retail punters were swept up in the frenzy this afternoon but I doubt intls would be participating”
Istanbul rose to 49.03% at market close on November 9 from 48.98% the previous day, suggesting foreign player portfolio inflows of around $100mn.
We have before seen hedge funds raising the Istanbul stock market out of the depths within a few hours with around $100-150mn. But they are able to run as fast as they hit.
Rallies in Turkey’s credit default swaps (CDS) and eurobonds may also be a sign of foreign interest in a Turkish rally.
However, the government-run banks are still active in the USD/TRY market. With no end to the burning of FX reserves, one should not be convinced by any so-called organic recovery in Turkish markets.
The "He" mentioned here is Erdogan who has "leaked" the idea that he was not aware of the negative state of the central bank's reserves.