Fate Of Turkey’s Stock Market Is In The Hands Of An Algo Named “The Dude”

I mean, didn’t you notice on the plane when you started talking, eventually I started reading the vomit bag? Didn’t that give you some sort of clue, like hey, maybe this guy is not enjoying it? You know, everything is not an anecdote. You have to discriminate. You choose things that, that are funny or mildly amusing or interesting. — Steve Martin as “Neal Page” in “Planes, Trains, and Automobiles”

If you’re a producer of financial content for public consumption, anything goes during the trading week. Doesn’t matter how trivial the chart or how esoteric the point, people are looking for anything that might give them an edge.

On weekends, it’s an entirely different story. You’ve gotta pick and choose, because as my mentor once told me, “no one wants to read about deep finance on the weekends.”

So, as Steve Martin told John Candy, “you have to discriminate. You choose things that are funny or mildly amusing.”

Well on Saturday afternoon, I found something that fits that description and happily, it’s directly related to the referendum in Turkey which, as I noted earlier today, is without question the most important geopolitical event of the weekend barring some kind of mushroom cloud on the Korean Peninsula.

On Monday morning, the Bloomberg headline read as follows:

Borsa Istanbul Banks Index up 3.9% as of 12:33pm in Istanbul, most since Jan. 30; benchmark Borsa Istanbul 100 Index rises 1.8%.

Analysts rushed to explain the apparent anomaly as the Borsa Istanbul 30 Index (a gauge of Turkey’s biggest listed companies), jumped 2% – the biggest gain among 96 equity benchmarks tracked by Bloomberg.

The consensus: it was all about the referendum one way or another.

“While referendum is obviously a risk, in the short-term the market is more interested to see the referendum being out of the way and on the removal of uncertainty,” Ozgur Yasar Guyuldar, head of equity sales at Raiffeisen Centrobank AG in Vienna said.

“Market is currently longing for reduced uncertainty in Turkey which will, in the short term, improve the sentiment,” Guyuldar continued. “Banks are the obvious destination for tactical longs.”

“Analysts are reviewing their expectations for 1Q earnings for banks,” BGC’s Cagdas Dogan suggested, adding that “referendum bets for a possible Yes win and recommendation upgrades; obviously these factors are pushing banks higher.”

Yes, “obviously.”

Or maybe not.

Because as it turns out, this is who was responsible:

Cue Bloomberg again:

The rally kept Istanbul-based brokerage Yatirim Finansman very busy. The firm was a net buyer of 208 million liras ($55.8 million) of Turkish equities, a volume that exceeded that at the second-most active trading house by almost three times.

While Economy Minister Nihat Zeybekci diagnosed markets as buying into the result of the approaching constitutional referendum, the initial indications are that Monday’s rally failed to attract broader investor attention.

The iShares MSCI Turkey Exchange-Traded Fund, the biggest ETF focused on Turkish stocks, didn’t attract any inflows. It had registered outflows on all of the previous five trading days.

[…]

Yatirim Finansman has been the talk of the Istanbul market since early 2016, when it became clear that huge bets made through the brokerage were steering the direction of the Turkish stock market. Local traders started referring to the mystery investor, whose identity was never revealed, as “the Dude.”

Calls to a spokesperson for Yatirim Finansman were not immediately returned. Its former chief executive officer, Seniz Yarcan, provided a partial insight last year, telling Dunya newspaper that the abnormally large trades were “not an investor, but a big, new fund-investor profile that trades with algorithms.”