Turkey's bank stocks tumble 10% after futures-driven rally (updated)

Turkiye Vakiflar Bankasi TAO

14/09/2022 14:25

(Adds quotes, details, background)
    By Ebru Tuncay
    ISTANBUL, Sept 14 (Reuters) - Turkey's bank stocks tumbled
the maximum permitted 9.9% on Wednesday, reversing a multi-week
rally driven by futures trading that helped Turkish shares
outperform all emerging market peers this year. 
    The abrupt turnabout began on Tuesday when banking stocks
shed 8%, driven in part by margin calls on futures positions,
analysts said. 
    On Wednesday, the declines tripped Borsa Istanbul circuit
breakers for big lenders Vakifbank  VAKBN.IS , Akbank
 AKBNK.IS , Albaraka Turk  ALBRK.IS , YapiKredi  YKBNK.IS  and
Garanti BBVA  GARAN.IS , meaning trading in those stocks was
temporarily suspended.
    Before the turnaround, the main banking index  .XBANK  had
more than doubled since the beginning of August. 
    Analysts said the recent rise in the spot market had been
driven by highly leveraged positions in the futures market
(VIOP), with the subsequent decline resulting partly from margin
calls.
    "Leverage can be used in VIOP. Therefore, investors can
acquire much more than their own equity," said one analyst who
declined to be named. 
    "There might be investors who wish to take positions without
funds or arbitrage funds. When a purchase goes through in VIOP,
the price difference between VIOP and the stock deepens
sharply," the analyst added.
    "Your assets grow when the index rises. This way, you're
able to trade in larger volumes and take riskier positions ...
However, this also brings about margin liabilities that deepen
any drop in the market."
    Analysts said there were a couple of institutions carrying
out the trades, but the funds behind the trades remain unknown.
    So far this year, Istanbul's main BIST-100 index  .XU100 
has risen by nearly 100% and the banking index is up more than
200%, making Turkish equities the best-performing in local
currency terms across emerging markets. 

 (
Reporting by Ebru Tuncay, Azra Ceylan and Halilcan Soran
Writing by Daren Butler
Editing by Jonathan Spicer and Mark Potter)
 ((halilcan.soran@thomsonreuters.com;))