David O'Byrne in Istanbul -
Turkey's stock market regulator has confirmed to bne that it has launched an investigation into allegations that Mark Mobius, executive chairman of Templeton Emerging Markets Group and a big investor in Turkey, may have "manipulated" the Istanbul Stock Exchange.
The spokesman for the Capital Markets Board (SPK) confirmed that an investigation was launched on November 1 following complaints from a number of investors concerning comments that Mobius made to reporters on October 27 in which he suggested that the Turkish stock market could drop by as much as 15-20% by the end of this year.
According to the spokesman, complainants allege that Mobius' statement may have caused the benchmark ISE 100 index to drop by as much as 3% on the day. According to IMKB records, the ISE 100 fell by 3% to 68,589 on October 27 and the following day fell further to 67,312 before rallying to close marginally up on the day at 68,760.
The spokesman stressed that there is no presumption of guilt in launching an investigation and it is purely initiated on the basis of complaints received. It will take several weeks to complete, he added.
In a written response to bne, Mobius declined to comment on the allegations or the investigation.
Hard to prove
The allegations could prove difficult to substantiate. Traders at three Istanbul brokerages tell bne that while the movements of the ISE 100 on and after October 27 could be described as "unusual," at the same time it was also impossible to attribute them to a single root cause.
They pointed out that a number of factors may have affected movements over the past week. These include investors taking safe positions prior to the market being closed for a day-and-a-half public holiday from midday on Thursday, October 28. And the market's re-opening on Monday, November 1 coincided with its first "tick change" in six years - when the spread on share prices was halved from an average 0.5% down to an average 0.25%, a move aimed at decreasing the ISE's notorious volatility.
Commenting on the question of whether Turkish stock prices are set for a major correction, one trader pointed out that commentators have been warning for some time that due to low interest rates in the West "hot money" has been flowing in to emerging markets, creating what is widely perceived as being a stock market bubble. But with the current round of quantatative easing by western governments over, it is unclear whether these flows would dry up and whether a correction was indeed imminent.
Against this, traders are continuing to suggest that Turkish stocks are trading at substantially below their potential. In its "Closing Call" end-of-day bulletin on October 27, Istanbul brokerage Express Invest suggested a target level for the ISE of 75,826, a full 9% below its actual closing price on the day.
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