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Don’t Look Now, But Turkish Banks Are On Fire (In A Good Way)

Pray the Brunson deal doesn't fall through

For now, markets seem to be in wait and see mode ahead of an assumed resolution to the Andrew Brunson standoff. If Brunson is released, it would likely defuse tensions with Washington and potentially open the door to sanctions relief, trade talks and, perhaps, progress on the lingering Halkbank issue.

That’s from “Turkey’s Erdogan Doesn’t Need No Stinkin’ IMF, ‘Hopes’ Saudis Didn’t Kill Missing Journalist“, posted here on Sunday and to be perfectly honest with you, it was just a kind of on-the-fly assessment. That is, I hadn’t really checked into the latest developments on the Halkbank front, but I just assumed that if Brunson goes free, Treasury will be willing to work with Ankara on the Halkbank issue.

Fast forward 24 hours and that assessment looks accidentally prescient. Halkbank shares are on fire, rising more than 6% in Istanbul, on pace for their third-best day of what has otherwise been a truly horrible year:

Halk

This looks like short-covering ahead of the the expected release of Brunson. According to multiple reports in Turkish media, the Pastor could be freed within weeks with a Halkbank deal not far behind.

“I think that Pastor Brunson will be released,” Hurriyet’s Abdulkadir Selvi said Monday. That was echoed by Hurriyet Daily News’s Cansu Camlibel who contends that Halkbank  is “not far away from a settlement”.

“Chances for a small fine looks plausible, sources tell me”, Camlibel wrote today, adding that “we will find out in only four days if the outcome of last-minute negotiations with the U.S. Department of Treasury will yield results”.

Also surging is Vakifbank after they somehow managed to sell foreign currency debt just a week after selling TRY5 billion in subordinated notes.

Obviously, this is great news for the downtrodden Borsa Istanbul Banks Index, which is having one of its best days of 2018. The index fell some 50% from this year’s highs through the dark days in August when the lira collapsed:

TurkeyBanks

Now just pray the Brunson deal doesn’t fall through.


 

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