Turkish stocks up despite jitters over Syria strikes

Investors in Turkish markets are also looking ahead to a central bank meeting on Thursday

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Turkey's lira held steady and share prices inched higher on Wednesday despite market jitters over overnight air strikes targeting Islamic State militants just across the Turkish border in northern Syria.

The United Nations says about 138,000 Syrian Kurds have fled across the border into Turkey in the past few days to escape the Islamic State of Iraq and Syria militants.

The bombing of militant groups in Syria by the United States and its Arab allies on Tuesday sapped investors' demand for higher risk assets in emerging markets, including Turkey.

"The crucial issue is whether Turkey is going into ground warfare," said an Istanbul-based strategist who did not want to be named when speaking of political issues.

"If that happens Turkish markets will be hit for a few days and then may recover."

Turkish President Tayyip Erdogan has said Ankara could provide military or logistical support to U.S.-led air strikes against the insurgents in Syria. Turkey is home to a a major U.S. base in the southern town of Incirlik.

Investors in Turkish markets are also looking ahead to a central bank meeting on Thursday where most economists expect all of Turkey's four main interest rates to remain unchanged.

Three economists out of 14 in a Reuters poll predicted a reduction in the overnight lending rate and the overnight borrowing rate for primary dealers.

"The currency may appreciate a little bit if the central bank keeps all rates unchanged and that appreciation may help to lift Turkish equities slightly," the strategist said.

Having weakened on Tuesday, the lira was almost unchanged at 2.2322 against the dollar by 0727 GMT on Wednesday, compared with 2.2326 late on Tuesday but remained close to six-month lows.

Istanbul's main share index rose 0.41 percent to 76,991.76 points, compared with a 0.29 percent rise in the broader emerging markets index.

The benchmark 10-year government bond yield fell to 9.45 from 9.5 percent on Tuesday evening.

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