Friday 29 Mar 2024
By
main news image

LONDON (March 29): The Turkey stock market spotlight was on Halkbank on Wednesday, with its shares set for their biggest one-day fall after the arrest of the company's deputy CEO, while South African assets weakened further on political concerns.

Halkbank deputy CEO Mehmet Hakan Atilla was arrested in New York, accused of conspiring to conduct illegal transactions through US banks on behalf of Iran's government and other entities

Shares in Halkbank dropped 14.3% — the biggest daily fall in percentage terms since it was listed in 2007. The broader Istanbul index lost 1.3% and Turkey's banking index shed 2.8%.

Halkbank dollar bonds also fell, with issues maturing 2021 and 2020 down by more than 0.7 US cent in the US dollar, according to Tradeweb data, hitting six-week lows. The 2019 issue slipped by 0.66 US cents.

Turkish credit default swaps inched to a one-week high of 240 basis points, IHS Markit said.

"The arrest is undeniably highly contentious, given that Halkbank is a majority state-owned bank," analysts at MUFG Securities said.

South African assets, meanwhile, extended losses as the rand and government bond prices fell for a third straight day. The rand was down 0.7%, bringing this week's losses against the US dollar to 5% after the sudden recall of Finance Minister Pravin Gordhan from a London investor roadshow.

This has reignited fears that his long-running power struggle between Gordhan — seen by investors as a guarantor of fiscal prudence and South Africa's investment grade rating — and President Jacob Zuma is coming to a head.

"Fair to say that if Zuma manages to successfully remove Gordhan it would produce a seismic and very negative move in South African markets, ratings et al. It would suggest ... a more aggressive and confiscatory black empowerment agenda," said Tim Ash, sovereign strategist at BlueBay Asset Management.

Benchmark government bond yields were just off two-month highs, having shot up 70 basis points this week. Five-year credit default swaps inched to 215 bps, a 2½-month high, according to IHS Markit.

Broader emerging equities were flat and currencies mostly weakened after upbeat US data and hawkish policymaker comments boosted the US dollar and Treasury yields.

Hungarian bond yields slipped further after the central bank struck a dovish note in a Wednesday policy meeting at which it tried to squeeze more cash out of short-term deposits. Three-year yields eased 7 bps to 1.23%.

 

      Print
      Text Size
      Share