Seeking Alpha

Three Turkish ministers resign amid corruption probe; shares fall

  • Turkish Economy Minister Zafer Caglayan and Interior Minister Muammer Guler have resigned amid a corruption probe that has turned into a battle between the government on one side, and Turkey's judiciary and police on the other.
  • The ministers resigned after their sons were among 24 people arrested following accusations of bribery, money laundering and gold smuggling.
  • The affair has hurt investor confidence and driven down share prices, although BlackRock (BLK) views the situation as an opportunity. "We have been adding to positions in Turkey...as valuations are now compelling," says BlackRock's Sam Vecht. As it happens, BlackRock is the top private shareholder in two companies whose CEOs have been detained: state-owned lender Turkiye Halk Bankasi (THBIF) and real-estate developer Emlak Konut Gayrimenkul Yatirim Ortakligi (EKKGF).
  • The ISE 100 stock index is -2.4%, while the USD-TRY is -0.1% at 2.077 Turkish lira.
  • Update: The environment minister has also stepped down and called for Prime Minister Tayyip Erdogan to follow suit.
  • ETF: TUR
Comments (11)
  • mitrado
    , contributor
    Comments (1948) | Send Message
     
    Amazing how even Turkey has more justice than Portugal.
    25 Dec 2013, 08:11 AM Reply Like
  • Debutant
    , contributor
    Comments (1901) | Send Message
     
    My Turkish friends (they are 2 in total) are telling me that it is a power struggle between two Islamist groups; one being the ruling party. Today I doubled my position in Turkish stocks to a miserable 0.6% from a doubly miserable 0.3%

     

    p.s.: This is not a recommendation to buy. After all, local pundits are expecting a further fall in the magnitude of 7 to 10%.
    25 Dec 2013, 08:19 AM Reply Like
  • Jeff CA
    , contributor
    Comments (51) | Send Message
     
    Just an interesting note: I work for Rio Tinto they just changed our 401(K) Savings Plan from BlackRock Small Cap Growth Equity fund (PSGIC) to Wells Fargo Advantage Small Company Growth Institutional fund (WSCGX).
    25 Dec 2013, 11:36 AM Reply Like
  • Efsinvestment
    , contributor
    Comments (1596) | Send Message
     
    The valuations seem very compelling, yet the market does not go up. The average P/E ratio is about 7, which is somewhat closer to peak-recession valuations. Yet, Turkish markets lost almost 15% in the last few weeks. This happened at a time when global markets are reaching to new highs. I wonder who is selling the shares and who is buying?
    25 Dec 2013, 11:45 AM Reply Like
  • User 10967731
    , contributor
    Comment (1) | Send Message
     
    This is also a sign of an increase in the country's political risk for the next 1 year. The situation will go worse in 2014 since it is the election season in Turkey. Beyond 2014, it is pretty uncertain, it will depend on the results of the elections. ( we do not assume that the president will resign)
    25 Dec 2013, 04:44 PM Reply Like
  • Efsinvestment
    , contributor
    Comments (1596) | Send Message
     
    2014 is not an election season. There will be elections for local municipalities only. The general elections will be held in 2015. In any case, there are always elections and political turnarounds in the country. Yet, there was a big deal of divergence with TUR and the rest of the world which is a bit suspicious.
    25 Dec 2013, 05:42 PM Reply Like
  • Debutant
    , contributor
    Comments (1901) | Send Message
     
    The national BIST-100 index is down another 4.20% today.

     

    In December alone the TRY lost 3.5% against the Euro. Down 16.5% YTD.
    25 Dec 2013, 05:57 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    as with many other emerging markets as well. we'll see what the weekend brings. again i would not be initiating any new long positions during the Christmas/New Years break.
    25 Dec 2013, 06:57 PM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1274) | Send Message
     
    Emerging Market with current account deficit= Relies on foreign money to keep going. Doesn't mesh well with volatile politics.
    Also of interest: lots of gold trading with Iran. Sanctions workaround?
    25 Dec 2013, 06:28 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    I did goolge the Boeing 737 to investigate the plane and Boeing's stock price and the first thing that came up was "gold smuggling." Obviously there are some amazing mines in Turkey as well as Iran. With the USA now a net energy producer I think you could see a lot of continued volatility in the EM space...something that is not good in my view for bullish sentiment going into 2014.
    25 Dec 2013, 07:00 PM Reply Like
  • Efsinvestment
    , contributor
    Comments (1596) | Send Message
     
    What a volatile month in Turkey. TUR is up 8% today.
    30 Dec 2013, 09:55 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|