Week of Drama Pushes Turkish Stock Volatility to Five-Month High

(Bloomberg) -- It’s been a dramatic week in Turkey and Istanbul stock traders have been in the thick of it.

Investor appetite for risk fluctuated as U.S.-led missile strikes on neighboring Syria at the weekend were upstaged by intense speculation of early elections. President Recep Tayyip Erdogan’s announcement on Wednesday of a snap vote in June helped to drive short-term volatility in Turkish stocks to the highest in five months.

Week of Drama Pushes Turkish Stock Volatility to Five-Month High

Turkey’s currency has also experienced wild swings, with the lira up 1.5 percent since Monday after two weeks marked by successive record lows. The currency has been buoyed by bets that policy makers will increase interest rates ahead of the elections.

“We were expecting this year to be a volatile one, but a lot has happened over the past couple of weeks,” Akin Tuzun, an analyst at VTB Capital, said by email. “Weakening in the currency, a surge in yields, prospects for interest-rate increases, worries about banks and some companies’ restructuring plans, coupled with the snap election -- it seems like things all came at once, and it appears this will continue until the elections.”

  • 10-day realized volatility for the benchmark Borsa Istanbul 100 Index climbed to 26.9%, the highest level since Nov. 10
  • On Wednesday, Erdogan called elections for June 24, more than a year earlier than scheduled and a day after the leader of his Ak Party’s election ally MHP lobbied for the poll to be brought forward
  • Turkish stocks have dropped 2.6 percent this month, heading for their worst April since 2012

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