Turkish bank stocks' rollercoaster ride leaves investors reeling

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Head-spinning volatility in Turkey's banking shares has left investors reeling after a 100% stock market surge this year, driven by the highest available real returns, gave way to a sharp slide this week.

Reversing sharply, the lenders' shares have plunged as much as 28% since Monday's closing price.The initial rally came as inflation, at more than 80% last month, stoked a nationwide cost-of-living crisis that was set off a year ago by unorthodox interest rate cuts urged by President Tayyip Erdogan.The rampant inflation prompted investors to dive into equities to protect savings, analysts said.

Before bank equities reversed sharply this week, the investor profits went largely to locals: foreign investors' share of Turkish stocks fell to 33% in July from 63% at the beginning of 2020.Cemal Demirtas, deputy general manager at Ata Invest, said global inflation lifts all stock markets and Turkey had also benefited by the recently stable foreign exchange rate and a "balanced" foreign policy.

"It is very clear that some brokerage houses are leading the transactions," but the clients are unclear, the analyst said.

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