Turkish lira, stocks down after PM attacks speculators

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Turkish stocks plunged and the lira weakened on Monday as markets were rattled after Prime Minister Tayyip Erdogan railed against speculators and warned street protesters that his patience had limits.

The cost of insuring exposure to Turkish debt rose to the highest since the end of October 2012, according to data from the financial information services company, Markit, which showed five-year credit default swaps jumping 8 basis points (bps) to 172 bps.

Erdogan held six rallies on Sunday, a measure of tensions after the worst rioting of his decade in power.

Speaking in Ankara, he rounded on what he a called a “high interest rate” lobby of speculators for causing volatility in the country’s capital markets and vowed to “choke” those who were growing rich off “the sweat of the people.”

“Those who attempt to sink the bourse, you will collapse ...If we catch your speculation, we will choke you. No matter who you are, we will choke you,” he said.

He urged Turks to put their money in state not private banks.

Istanbul’s main share index fell 2.65 percent to 76,255.25 points on Monday after closing up 3.21 percent on Friday. The index lost around 15 percent last week as protests raged.

The lira weakened to 1.8900 against the dollar on Monday from 1.8790 late on Friday by 8:10 GMT.

On Friday it had hit its weakest against its euro/dollar basket since October 2011, reaching 2.210 compared with 2.178 on Thursday. It stood at 2.1933 on Monday.

The two-year benchmark bond yield fell to 6.27 percent in thin volumes from 6.55 percent on Friday.

Timothy Ash, head of emerging market research at Standard Bank, said Erdogan’s outburst marked a change in attitude towards foreign investors.

“This marks an abrupt about turn for an administration that has always appeared to value foreign investment and has been very sensitive to markets, and how markets perceive its policies,” Ash said.

“That era now seems to have ended and the administration appears set on a collision course with foreign investors and with markets,” he said.

Shares in real estate firm Emlak GYO tumbled more than 8 percent after the company postponed its secondary public offering due to the high volatility in domestic markets.

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