Turkish stocks continue to rally as investors renew risk appetite, BIST closes at historic high

Turkish stocks stretched their rally to almost three months as the country's recovering economic outlook and the easing of regional tensions increased Turkish assets' appeal for investors.

Turkey's benchmark stock index on Tuesday hit the highest closing level in its history, a record 121,423.34 points, up 0.98% from the previous close. Borsa Istanbul's BIST 100 index started the day at 120,392.65 points. As of the daily close, it earned 1,174.31 points from last week's close of 120,249.03 points.

Meanwhile, Turkey's credit default swaps (CDS) dropped to 267 points, the lowest level since May 2018, with two-year bond yields also falling to 10.72%, seeing the lowest level since Jan. 6, 2017.

Analysts said the markets are feeling the positive effects of improvements in macroeconomic indicators such as inflation, CDS premiums, and gross domestic product (GDP).

During the day, the index hovered between 119,574.71 points and 121,504.40 points. The index has been rising for 11 consecutive weeks. This was the first time Turkish stocks hit above 120,000 points since March 2018.

The total market value of the BIST 100 was around 832.7 billion Turkish liras ($142.3 billion) by market close, with a daily trading volume of 14 billion Turkish liras ($2.4 billion).

On the second transaction day of the week, 66 stocks on the index rose, 29 were down, and five were flat compared to Monday. The highest trading volumes were posted by national flag carrier Turkish Airlines, iron/steel producer Kardemir and petroleum refiner Petkim.

Investors expect the rally in Borsa Istanbul, which kicked off in November 2019, to stretch into its 11th week with Borsa Istanbul's BIST 100 index closing the week with a new high record.

Analysts reported that the recovery in Turkey's macroeconomic indicators, along with decreasing risk perception in the global economy and the expected signing of an initial U.S.-China trade deal, fueled investors' appetite for riskier assets.

Turkey's industrial production soared 5.1% in November 2019 compared to the same month of the previous year. Meanwhile, the economic confidence index reached 93.8, its highest since July 2018.

Analysts noted that the improved activity in industrial production and rising economic confidence index along with the fall in interest rates strengthened investors' expectations that profitability ratios would rise.

Meanwhile, the Turkish lira emerged among other major currencies positively affected by the easing of increased risk perception over tensions between the U.S. and Iran. The lira increased by 0.4%, ahead of a central bank meeting Thursday.

The U.S. dollar-Turkish lira exchange rate stood at 5.8760 as of 9:30 a.m. local time on Tuesday, which was also at 5.8730 at Monday's close.

The euro-Turkish lira exchange rate also stood at 6.5480, versus 6.5290, and 1 British pound can be traded for 7.6520 Turkish liras, versus 7.6440 at the previous close.

One barrel of Brent crude oil sold for around $64.30 as of 10 a.m. local time Tuesday.