Istanbul Stock Market Index Stable
The İstanbul Stock Exchange which remained above the support point of 58,000 despite the rise in commodity prices and growing uncertainties in the Middle East and North Africa, has the potential to rise until the first resistance point of 67,000 and move on until the 70,000 point, the second resistance point, Turkish experts say, making predictions based on technical analysis.
The İstanbul Stock Exchange benchmark index (İMKB-100) has embarked on a slow yet steady rise as investors are expecting political stability to continue through general elections to be held in June, experts say.
The bourse has bounced back from a crucial support point of the 58,000 on March 2 after witnessing consecutive falls. The fear that a tumbling market could break the support point of 58,000 and could lead to a sharper fall has pulled the İMKB-100 index higher. After March 2, although there were a number of unimportant fluctuations, the bourse started to rise in general.
More importantly, the İMKB-100 index basically distinguished itself from the rest of the world’s stock markets as they were hit by recent political and environmental developments that proved to have a larger scale of impact than issues pertinent to only a part of the world. More specifically, the Turkish main bourse did not respond significantly to rising political unrest in North Africa and the Middle East — particularly the present turmoil in Libya in which a multinational coalition force recently intervened — and the massive earthquake and tsunami that hit northeast Japan on March 11, a catastrophe that was exacerbated by a radiation leak from a nuclear power plant.
Generally, the İMKB could not remain unresponsive to these developments and should have tumbled just like foreign bourses did. Yet, this was obviously not the case. There were some slight falls but overall, the bourse managed to rise from 58,664 points on March 2 to the 65,000 on Wednesday — an increase of 11 percent. On the other hand, one who makes a technical analysis based on the past behaviors and reactions of the İMKB-100 should be able to tell that the bourse, which remained above the support point of 58,000 has the potential to rise until the first resistance point of 67,000 and move on until the 70,000 point, the second resistance point. As investors mainly look for a reason to trade shares in the market, the general elections to be held in June seems to look like a good reason for investors to buy back the shares they sold previously.
Selim Işıklar, an analyst at the Info Yatırım investment brokerage, told Sunday’s Zaman that the İMKB increased “too fast” after the outcome of the Sept. 12 public referendum held on a constitutional amendment package. “The bourse reached 71,000 points but immediately tumbled as investors believed Turkish stocks were overweight. Also, funds were withdrawn from the stock exchanges of emerging markets and were transferred to the US. As an outcome of these two developments, the İMKB-100 dropped to 58,000 points,” Işıklar said.
“However, the bourse has differentiated itself from international stock exchanges and started to increase slowly from those levels. The most crucial reason could be explained by the coming general elections. Investors have started to buy the outcome of the June elections as they see a single-party majority government — the Justice and Development Party [AK Party] — as a must for political stability in the country,” he noted, adding that a possible upgrade of its credit rating by international credit rating agencies is also another reason behind the upward stock index.
Meanwhile, market analyst Abdulkadir Çakır underlined that the forthcoming general elections could be seen as having a “catalyzing effect” that will speed up the bullish market. He told Sunday’s Zaman that the stock market will keep an upward trend since investors are almost sure about the outcome of the general elections. “The market is pretty sure about continuing political stability in Turkey. Therefore, I think they are also focusing on a possible credit rating upgrade by rating agencies that is likely to happen after the elections in June,” Çakır said. “If these fundamental analyses will work, I think the İMKB index will see 80,000 points. At least, technically this should work,” he added.
Another expert who also supports the view that a further rise in the market before the general elections is expected is Ersagun Şimşek, director of international sales and trading at Tera Stockbrokers. He told Sunday’s Zaman that a single party and politically powerful government outcome after the general elections is being priced by investors and said a jump in the bourse could be expected after a possible credit rating hike.
Prime Minister Recep Tayyip Erdoğan’s AK Party has been in office since late 2002 when it formed the government following a landslide victory in the general elections. Public opinion polls suggest that popular support for Erdoğan can even surpass that shown in the 2007 elections when Turks let him form a single-party government for a second time with 46.7 percent of the vote.
Despite the fall in the İMKB, in total, by almost 2 percent on Wednesday after the central bank said it has kept the policy rate unchanged at 6.25 percent and raised reserve requirements “unexpectedly” between 200 and 500 basis points due to a sharp fall in the banking index, it quickly rebounded the following day. Experts say the overall trend of the stock exchange is upward and that the “spring season” will likely to continue until the general elections in June. Moreover, the common view that rising oil prices will not be permanent and that it will return back to pre-unrest levels seems to support the comments of experts regarding a stock market rise for the next couple of months.
SOURCE: TODAYS ZAMAN
27 March 2011
